OREANDA-NEWS. Fitch Ratings assigns the following rating to the Kentucky Higher Education Student Loan Corporation series 2015-1 (KHESLC 2015-1) student loan asset-backed notes:

--\$134,605,000 2015-1 notes 'AAAsf'; Outlook Stable.

KEY RATING DRIVERS

High Collateral Quality: The trust collateral consists of Federal Family Education Loan Program (FFELP) loans, including approximately 50.2% of rehab loans, with guaranties provided by eligible guarantors and reinsurance provided by the U.S. Department of Education (ED) for at least 97% of principal and accrued interest.

Sufficient Credit Enhancement: Cash flow scenarios for class A notes were satisfactory under Fitch stresses. At closing, total parity is expected to be 104.0%. Total credit enhancement (CE) is provided by overcollateralization (OC) and excess spread.

Adequate Liquidity Support: Liquidity support for the 2015-1 notes is provided by a \$336,513 reserve fund and a \$3.5 million capitalized interest account both of which will be funded with note proceeds at closing.

Acceptable Servicing Capabilities: KHESLC will service the entire 2015-1 portfolio, and Nelnet Servicing LLC will be the backup servicer. Fitch believes that both servicers are acceptable servicers 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 credit enhancement driven by positive excess spread given favorable basis factor conditions could lead to future upgrades. For further discussion of Fitch's sensitivity analysis, please see the presale titled 'KHESLC 2015-1', dated Feb. 5, 2015.