OREANDA-NEWS. Fitch Ratings has affirmed the class A-2 bond issued by Kentucky Higher Education Student Loan Corp 2010 Trust at 'AAAsf'. The Rating Outlook remains Stable.

KEY RATING DRIVERS

High Collateral Quality: The trust collateral consists of 100% Federal Family Education Loan Program (FFELP) loans. The credit quality of the trust collateral is high, in Fitch's opinion, based on the guarantees provided by the transaction's eligible guarantors and reinsurance provided by the U.S. Department of Education (ED) for at least 97% of principal and accrued interest. The current U.S. sovereign rating is 'AAA' with a Stable Outlook.

Sufficient Credit Enhancement: Credit Enhancement (CE) is provided by overcollateralization (OC) and future excess spread. As of September 2014, total parity is 110% (9.09% CE). The trust is releasing cash as long as the specified OC (110% total parity) is maintained.

Adequate Liquidity Support: Liquidity support for the note is provided by a reserve account (0.25% of pool balance or \$350,000).

Acceptable Servicing Capabilities: Kentucky Higher Education Student Loan Corp (KHESLC) is responsible for servicing the trust. Fitch believes KHESLC is an acceptable servicer of FFELP student loans.

RATING SENSITIVITIES

Since FFELP student loan ABS rely on the U.S. government to reimburse defaults, 'AAAsf' FFELP ABS ratings will likely move in tandem with the 'AAA' U.S. sovereign rating. Aside from the U.S. sovereign rating, defaults and basis risk account for the majority of the risk embedded in FFELP student loan transactions. Additional defaults and basis shock beyond Fitch's published stresses could result in future downgrades. Likewise, a buildup of CE driven by positive excess spread given favorable basis factor conditions could lead to future upgrades.

Fitch has taken the following rating action:

Kentucky Higher Education Student Loan Corp 2010 Trust:

--Class A-2 affirmed at 'AAAsf'; Outlook Stable.