Fitch Expects to Rates Rhode Island Student Loan Authority 2015 Senior Series; Presale Issued
--\$1,400,000 2015 (Serial 2016) 'Asf(EXP)'; Outlook Stable;
--\$1,500,000 2015 (Serial 2017) 'Asf(EXP)'; Outlook Stable;
--\$1,650,000 2015 (Serial 2018) 'Asf(EXP)'; Outlook Stable;
--\$1,750,000 2015 (Serial 2019) 'Asf(EXP)'; Outlook Stable;
--\$2,000,000 2015 (Serial 2020) 'Asf(EXP)'; Outlook Stable;
--\$2,150,000 2015 (Serial 2021) 'Asf(EXP)'; Outlook Stable;
--\$3,040,000 2015 (Serial 2022) 'Asf(EXP)'; Outlook Stable;
--\$3,975,000 2015 (Serial 2023) 'Asf(EXP)'; Outlook Stable;
--\$4,000,000 2015 (Serial 2024) 'Asf(EXP)'; Outlook Stable;
--\$4,000,000 2015 (Serial 2025) 'Asf(EXP)'; Outlook Stable;
--\$3,450,000 2015 (Serial 2026) 'Asf(EXP)'; Outlook Stable;
--\$3,300,000 2015 (Serial 2027) 'Asf(EXP)'; Outlook Stable;
--\$2,050,000 2015 (Serial 2028) 'Asf(EXP)'; Outlook Stable;
--\$2,000,000 2015 (Serial 2029) 'Asf(EXP)'; Outlook Stable;
--\$2,000,000 2015 (Serial 2030) 'Asf(EXP)'; Outlook Stable;
--\$3,100,000 2015 (Serial 2031) 'Asf(EXP)'; Outlook Stable.
Fitch also expects to confirm the ratings of the existing bonds in the trust indenture dated June 1, 2009 at closing.
KEY RATING DRIVERS
Adequate Collateral Quality: The master trust will be collateralized by existing and new fixed-rate private student loans to be originated from deal closing to September 1, 2016. It is expected that approximately \$43 million of student loans will be added to the trust at the end of the acquisition period. All loans have been credit tested, and have been or will be originated under the RISLA Fixed Rate Loan program.
Sufficient Credit Enhancement: Transaction cash flows were satisfactory under all stressed scenarios at Fitch's 'A' rating category. Credit enhancement (CE) is provided by overcollateralization and excess spread. The parity ratio is expected to be 110.59% at closing. Cash will be released to the issuer when the parity reaches 121% only until Jun. 1, 2020.
Adequate Liquidity Support: Liquidity support will be provided by a debt service reserve fund sized at 3% of the outstanding bond balance, which will be fully funded at closing with a floor of \$2,063,500
Satisfactory Servicing Capabilities: RISLA will service all of the loans in the master trust and Fitch views RISLA as an acceptable servicer.
RATING SENSITIVITIES
As Fitch's base case default proxy is derived primarily from historical collateral performance, actual performance may differ from the expected performance, resulting in higher loss levels than the base case. This will result in a decline in CE and remaining loss coverage levels available to the notes and may make certain note ratings susceptible to potential negative rating actions, depending on the extent of the decline in coverage.
Fitch evaluated the sensitivity of the ratings assigned to RISLA 2015-A to increased defaults, reduced recoveries and excess spread over the life of the transaction. Fitch's analysis found that the transaction displays some sensitivity to the above factors, showing a potential downgrade to 'BBB-' and 'B+'. For further discussion of our sensitivity analysis and Fitch's stress analysis please see the presale titled 'Rhode Island Student Loan Authority 2015 Senior Series, dated March 31, 2015.
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