|[January 08, 2014]
Fitch Maintains Negative Rating Watch on N Carolina State Ed Assistance Authority, Series 2013-1
NEW YORK --(Business Wire)--
Fitch Ratings maintains the Negative Rating Watch on the notes currently
rated 'AAAsf' issued by North Carolina State Education Assistance
Authority, Series 2013-1.
KEY RATING DRIVERS
High Collateral Quality: The collateral consists of 100% of 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.
Rating Watch Maintained: 'AAAsf' rated tranches of U.S. FFELP student
loan ABS (News - Alert) are maintained on Rating Watch Negative following the revision
of the U.S. sovereign rating on Oct. 15, 2013.
Sufficient Credit Enhancement: CE is provided by overcollateralization
(OC; the excess of trust's asset balance over bond balance) and excess
spread. As of September 2013, parity is at 103.80%. The parity ratio
should continue to rise until a Specified Overcollateralization Amount
of greater than 110% parity or $7,500,000 OC is met.
Adequate Liquidity Support: Liquidity support is provided by a Debt
Service Reserve Fund currently sized at $1,298,028 and a Capitalized
Interest Fund currently sized at $950,000 as of September 2013.
Acceptable Servicing Capabilities: College Foundation, Inc. is
responsible for day-to-day servicing of the trust. Fitch believes
College Foundation, Inc. is an acceptable servicer of FFELP student
loans. Nelnet Servicing, LLC is the backup servicer.
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 buildup of CE driven by positive excess spread given
favorable basis factor conditions could lead to future upgrades.
Initial Key Rating Drivers and Rating Sensitivity are further described
in the Presale report published on Jan. 10, 2013.
Fitch has taken the following rating actions:
North Carolina State Education Assistance Authority, Series 2013-1:
--Class A note at 'AAAsf', Negative Rating Watch maintained.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' dated May 24, 2013;
--'Rating U.S. Federal Family Education Loan Program Student Loan ABS
Criteria' dated May 17, 2013.
A comparison of the transaction's RW&Es to those of typical RW&Es for
student loans is available by accessing the reports and links below:
--'State of North Carolina State Education Assistance Authority, Series
2013-1 - Appendix', dated Jan. 10, 2013;
--'Representations, Warranties, and Enforcement Mechanisms in Global
Structured Finance Transactions -- Amended', dated April 17, 2012.
Applicable Criteria and Related Research:
Representations, Warranties, and Enforcement Mechanisms in Global
Structured Finance Transactions -- Amended
State of North Carolina State Education Assistance Authority, Series
2013-1 -- Appendix
Rating U.S. Federal Family Education Loan Program Student Loan ABS
Criteria -- Amended
Global Structured Finance Rating Criteria
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