Fitch Affirms Nelnet 2014-6; Outlook Revised to Positive for Sub Notes
KEY RATING DRIVERS
High Collateral Quality: The trust collateral is comprised of 100% of Federal Family Education Loan Program (FFELP) loans, including 67.6% rehabilitated 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. sovereign rating 'AAA' with a Stable Outlook.
Sufficient Credit Enhancement (CE): CE is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance) and excess spread, and for the senior notes, subordination of the class B notes. As of May 2015, total parity is 102.32% (2.27% CE) and senior parity is 103.96% (3.81% CE). The trust will continue to release cash given it maintains the Specified Overcollateralization Amount equal to the greater of 2.27% of the adjusted pool balance and \\$2,000,000.
Adequate Liquidity Support: Liquidity support is provided by a reserve account sized at the greater of (i) 2.25% of the outstanding bond balance before January 2016 (steps down to 0.25% of the outstanding bond balance after January 2015) and \\$573,300, currently equal to \\$12,094,042.
Acceptable Servicing Capabilities: Day to day servicing is provided by Nelnet, Pennsylvania Higher Education Assistance Agency (PHEAA), Great Lakes Higher Education Loan Services Inc. (GLELSI) and Xerox-ES. In Fitch's opinion, all servicers are acceptable servicers 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 build-up 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's analysis of the Representations and Warranties (R&W) of this transaction can be found in the reports titled 'Nelnet Student Loan Trust 2014-6 -- Appendix'. These R&W are compared to those of typical R&W for the asset class as detailed in the special report 'Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions' dated March 26, 2015.
Fitch has affirmed the following ratings:
Nelnet Student Loan Trust 2014-6
--Class A at 'AAAsf'; Outlook Stable;
--Class B at 'A+sf'; Outlook revised to Positive from Stable.
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