Fitch Affirms Iowa Student Loan Liquidity Corp. Series 2011B; Outlook Stable
OREANDA-NEWS. Fitch Ratings has affirmed the series 2011B note issued by the Iowa Student Loan Liquidity Corporation's student loan revenue bonds, senior series 2011B note (ISLLC 2011B) at 'Asf'. The Rating Outlook remains Stable.
Fitch's Global Structured Finance Rating Criteria and Private Student Loan Asset-Backed Securities (ABS) Criteria were used to review the transaction.
KEY RATING DRIVERS
Adequate Collateral Quality: The ISLLC 2011B bond is secured by existing private student loans. All loans have been credit tested and are originated under ISLLC's private loan programs. Based on the trusts' performance, Fitch estimates remaining defaults to range between 6% and 10% for ISLLC 2011B as a percentage of the current principal balance. Recovery is assumed to be 10% in our analysis.
Sufficient Credit Enhancement (CE): Transaction CE is sufficient to provide loss coverage multiples corresponding to Fitch's 'A' rating category. CE is provided by overcollateralization (OC; the excess of the trust's asset balance over the bond balance) and excess spread. As of August 2015, the parity ratio (total assets-to-total liabilities) is 187.39%.
Adequate Liquidity Support: Liquidity support is provided by a reserve account sized at the greater of 0.50% of the current pool balance and 0.15% of the initial pool balance.
Satisfactory Servicing Capabilities: Aspire Resources, a subsidiary of ISLLC, services the portfolio of loans, and Pennsylvania Higher Education Assistance Agency acts as the back-up servicer. Fitch has reviewed the servicing operations of Aspire Resources and views it to be an acceptable servicer.
Loss coverage multiples were determined by comparing the projected net loss amounts to available CE. Fitch used historical vintage loss data provided by ISLLC to form a loss timing curve representative of the collateral pools. After giving credit for seasoning of loans in repayment, Fitch applied the trust's current cumulative gross loss level to this loss timing curve to derive the expected gross losses over the projected remaining life. A recovery rate was applied, which was determined to be appropriate based on the latest data provided by the issuer.
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 will continue to monitor the performance of the trust.
DUE DILIGENCE USAGE
Fitch was not provided due diligence information from any third parties relating to ISLLC 2011B.
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