OREANDA-NEWS. Fitch Ratings affirms the note issued by Higher Education Loan Authority of the State of Missouri (MOHELA), series 2012-1 at 'AAAsf'. The Rating Outlook remains Stable Outlook.

KEY RATING DRIVERS

High Collateral Quality: The trust collateral consists of 100% of Federal Family Education Loan Program (FFELP) loans including approximately 7.6% rehabilitated (rehab) 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. Fitch's current U.S. sovereign rating is 'AAA' with a Stable Outlook.

Sufficient Credit Enhancement: Credit enhancement (CE) is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance) and excess spread. As of January 2015, total parity is 105.09% (4.84% CE). The trust is a full turbo structure; therefore no cash is released until the note is paid in full.

Adequate Liquidity Support: Liquidity support is provided by a reserve account. The reserve is sized equal to the greater of 0.25% of the pool balance, and \$383,468.

Acceptable Servicing Capabilities: MOHELA will be responsible for servicing the portfolio. PHEAA will also act as backup servicer. Fitch has reviewed the servicing operations of both MOHELA and PHEAA and believes them to be 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 CE driven by positive excess spread given favorable basis factor conditions could lead to future upgrades.

A comparison of the transaction's representations, warranties, and enforcement mechanisms (RW&Es) to those of typical RW&Es for FFELP asset-backed securities is available in the presale appendix. This presale appendix and Fitch's special report on 'Representations, Warranties, and Enforcement Mechanisms on Global Structured Finance Transactions,' may be accessed via the links provided below.

Fitch has taken the following rating actions:

Higher Ed Loan Authority of the State of Missouri Series 2012-1:
--Series 2012-1 note affirmed at 'AAAsf'; Outlook Stable.