Fitch Affirms Nelnet Student Loan Trust Series 2010-2; Outlook Stable
KEY RATING DRIVERS
Collateral Quality: The trust collateral is comprised of 100% Federal Family Education Loan Program (FFELP) loans. In Fitch's opinion, the credit quality of the trust collateral is higher based on the 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. The Stable Outlook on the notes is consistent with Fitch's affirmation of the U.S. sovereign rating at 'AAA'; Outlook Stable.
Sufficient Credit Enhancement: Transaction credit enhancement is provided by overcollateralization and excess spread. As of August 2015 collection period, reported parity is at 110.83%. Excess cash has not been released as the trust is currently in turbo. All remaining funds are used to pay down the notes. Excess funds may be released once all of the notes have been paid in full.
Adequate Liquidity Support: Liquidity support is provided by a debt service reserve fund sized at the greater of 0.25% of the pool balance and $676,998.
Acceptable Servicing Capabilities: Nelnet, Inc. is responsible for the day-to-day servicing of the loans in the trusts. In Fitch's opinion, they are an acceptable servicer of FFELP student loans.
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 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 has affirmed the following ratings:
Nelnet Student Loan Trust Series 2010-2:
--Class A at 'AAAsf'; Outlook Stable.
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