OREANDA-NEWS. Fitch Ratings affirms the Arkansas Student Loan Authority Series 2010-1 senior student loan notes at 'AAAsf'. The Rating Outlook on the notes, which is tied to the sovereign rating of the U.S. government, is Stable.

KEY RATING DRIVERS

High Collateral Quality: The trust collateral comprises Federal Family Education Loan Program (FFELP) 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. Fitch currently rates the U.S. 'AAA' with a Stable Outlook.

Sufficient Credit Enhancement: CE is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance) and excess spread. As of February 2015, the reported parity is at 114.16%. Additionally, the trust is in turbo, and no cash will be released until all notes have been paid in full.

Adequate Liquidity Support: Liquidity support is provided by a debt service reserve fund currently sized at \$500,000 (0.25% of the bond balance, with a floor of \$500,000)

Acceptable Servicing Capabilities: Day-to-day servicing is provided by Edfinancial (90% of principal balance) and Nelnet (remaining 10%), with PHEAA acting as back up servicer for Edfinancial. Both servicers have demonstrated adequate servicing capabilities, according to Fitch.

RATING SENSITIVITIES

Since FFELP student loan ABS rely on the U.S. government to reimburse defaults, 'AAA'sf 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 taken the following rating action:

Arkansas Student Loan Authority Series 2010-1
--Class A affirmed at 'AAAsf'; Outlook Stable.