|[March 03, 2014]
Fitch to Rate Nelnet Student Loan Trust 2014-2; Issues Presale
NEW YORK --(Business Wire)--
Link to Fitch Ratings' Report: Nelnet Student Loan Trust 2014-2
Fitch Ratings expects to assign the following ratings to the Nelnet
Student Loan Trust 2014-2 student loan asset-backed notes as follows:
--$191,000,000 class A-1 notes 'AAAsf'; Rating Watch Negative;
--$222,000,000 class A-2 notes 'AAAsf'; Rating Watch Negative;
--$84,000,000 class A-3 notes 'AAAsf'; Rating Watch Negative;
--$12,000,000 class B notes 'A+sf'; Outlook Stable.
KEY RATING DRIVERS
High Collateral Quality: The trust collateral consists of 100% Federal
Family Education Loan Program (FFELP) loans, including approximately 25%
of rehabilitated (rehab) loans. In Fitch's opinion, the credit quality
of the trust collateral is high based on the guarantees provided by the
transaction's eligible guarantors and at least 97% reinsurance of
principal and accrued interest provided by the U.S. Department of
Rating Watch Negative: All existing and new issuances of 'AAA' rated
tranches of FFELP securitizations are on Rating Watch Negative following
the revision of the long-term foreign and local currency issuer default
ratings of the U.S.
Sufficient Credit Enhancement: Cash flow scenarios for class A and B
notes were satisfactory under Fitch's respective stresses. At closing,
total and senior parity are expected to be 100.89% and 103.33%,
respectively. Total credit enhancement (CE) is provided by
overcollateralization (OC) and excess spread, and for class A notes,
2.34% subordination is provided by class B notes. A target OC amount
equal to the greater of 1.25% of the adjusted pool balance and $2
million must be met before excess cash can be released from the trust.
Adequate Liquidity Support: Liquidity support is initially provided by a
$2.545 million reserve account (0.50% of outstanding note balance),
funded at closing with note proceeds. On or after the August 2015
distribution date, the specified reserve requirement is reduced to 0.25%
of the outstanding note balance with a floor of $509,000
Acceptable Servicing Capabilities: Nelnet will be responsible for
servicing approximately 64% of the 2014-2 portfolio. Pennsylvania Higher
Education Assistance Agency (PHEAA) (15%), Xerox Education Services, LLC
(13%) and Great Lakes Educational Loan Services Inc. (GLELSI) (8%) will
servie the remaining portfolio. In Fitch's opinion, all the servicers
listed are acceptable servicers of FFELP student loans.
Since FFELP student loan ABS (News - Alert) 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 credit enhancement driven by positive excess
spread given favorable basis factor conditions could lead to future
Additional discussion of Fitch's sensitivity analysis is available in
the presale, published today and available at 'www.fitchratings.com'
or by clicking on the above link.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (May 24, 2013);
--'Rating U.S. Federal Family Education Loan Program Student Loan ABS
Criteria' (May 17, 2013);
--'Representations, Warranties and Enforcement Mechanism in Global
Structure Finance Transactions' (April 17, 2012)
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
Rating U.S. Federal Family Education Loan Program Student Loan ABS
Criteria -- Amended
Representations, Warranties, and Enforcement Mechanisms in Global
Structured Finance Transactions -- Amended
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING
THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS.
AVAILABLE ON (News - Alert) THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'.
PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS
SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS
OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES
AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF
THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE
RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR
RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY
CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH
[ InfoTech Spotlight's Homepage ]