OREANDA-NEWS. Fitch Ratings has upgraded the senior notes for Vermont Student Assistance Corporation Series 2012-B to 'AAsf' from 'Asf'. The Rating Outlook remains Stable.

The rating upgrade of the senior notes is due to the continual increase in the senior parity and loss coverage multiple, as the trust cannot release excess cash until all notes are paid in full.

KEY RATING DRIVERS

Adequate Collateral Quality:
The trust is collateralized by approximately $155 million of VSAC's variable-rate student loans that were originated according to VSAC's underwriting criteria for their Variable Rate Loan Program. Based upon the trust's performance, the projected remaining gross defaults are expected to be in the range of 18%-22% of the current collateral balance. A recovery rate of 10% was applied, which was determined to be appropriate based on the latest data provided by the issuer.

Sufficient Credit Enhancement (CE):
CE is provided by overcollateralization and excess spread, as there are no subordination notes in this trust. As of the June 2015 distribution report, parity has increased to 165.24% from 158.00% a year ago. Additionally, no excess cash can be released to the issuer until all outstanding notes are paid in full.

Adequate Liquidity Support:
Liquidity support for the trust is provided by a debt service reserve fund which is currently at $820,367.

Satisfactory Servicing Capabilities:
Day-to-day servicing is provided by VSAC, and Firstmark Services, LLC, a subsidiary of Nelnet, Inc., as the back-up servicer. Both have demonstrated satisfactory servicing capabilities.

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 bonds and may make certain bond 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

No third-party due diligence was provided or reviewed in relation to this rating action.

Fitch has upgraded the following:

Vermont Student Assistance Corp Series 2012-B
--Class A-1 to 'AAsf' from 'Asf'; Outlook remains Stable;
--Class A-2 to 'AAsf' from 'Asf'; Outlook remains Stable.