Fitch Affirms Federated Student Finance Corporation Series 2010A-1
KEY RATING DRIVERS
Adequate Collateral Quality: The trust collateral consists of 100% FFELP student loans. In Fitch's opinion, the credit quality of the trust collateral is high based on the guarantees provided by the transaction's eligible guarantors and the reinsurance provided by the U.S. Department of Education (ED) for at least 97% of principal and accrued interest for the FFELP loans. Fitch currently rates the U.S. 'AAA' with a Stable Outlook.
Sufficient Credit Enhancement (CE): CE is provided by overcollateralization (OC), or the excess of the trust's asset balance over the note principal balance and excess spread. Fitch only rates the senior notes issued by the Federated Student Finance Corporation - Amended and Restated 2006 Indenture of Trust (2003). The senior parity ratio is 109.02% as of Feb. 28, 2015.
Adequate Liquidity Support: Liquidity is provided by a reserve account sized at the greater of 1% of the initial pool balance and \$500,000.
Satisfactory Servicing Capabilities: Day-to-day servicing will be provided by the AES, Sallie Mae Servicing Inc., ACS and Great Lakes Servicing, which Fitch deems to have satisfactory servicing operations at this time.
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.
Fitch has affirmed the following rating:
Federated Student Finance Corporation:
--Series 2010A-1 notes at 'AAAsf'; Outlook Stable.
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