Fitch Affirms Academic Loan Funding Trust 2011-1; Outlook Stable
KEY RATING DRIVERS
High Collateral Quality: The trust collateral consists of 100% rehabilitated Federal Family Education Loan Program (FFELP) 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 currently rates the U.S. 'AAA' with Outlook Stable.
Sufficient Credit Enhancement: Credit Enhancement is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance) and excess spread. As of April 2015, reported total parity is 105.80% (5.66% CE). Excess spread is being released at the 106% total parity cash release level.
Adequate Liquidity Support: Liquidity support is provided by a reserve account. The reserve is sized at the greater of 0.10% of the pool balance and \\$250,000.
Acceptable Servicing Capabilities: Xerox ES (fka ACS Education Services) is responsible for the day to day servicing of the student loans. Fitch believes Xerox ES to be an acceptable servicer of FFELP student loans.
RATING SENSITIVITIES
Since the FFELP student loan ABS relies 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.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.
Fitch has affirmed the following ratings:
Academic Loan Funding Trust 2011-1
--Class A-1 at 'AAAsf'; Outlook Stable.
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