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TMCNet:  Fitch to Rate Vermont Student Assistance Corporation, Senior Series 2014A; Presale Issued

[May 21, 2014]

Fitch to Rate Vermont Student Assistance Corporation, Senior Series 2014A; Presale Issued

NEW YORK --(Business Wire)--

Fitch Ratings expects to rate Vermont Student Assistance Corporation (VSAC), education loan revenue bonds, senior series 2014A (tax-exempt fixed rate bonds) as follows:

--$29,830,000 senior series 2014A serial bonds (2019 to 2033)'Asf(exp)';Outlook Stable.

KEY RATING DRIVERS

Adequate Collateral Quality: The trust will be collateralized by approximately $30 million of new fixed-rate private student loans to be originated from deal closing through June 15, 2015, in addition to the existing $5.2 million of loans previously originated by VSAC. The loans will be originated according to the underwriting criteria for the VSAC Fixed-Rate Private Loan Program.

Sufficient Credit Enhancement (CE): Transaction cash flows were satisfactory under all stressed scenarios at Fitch's 'Asf' rating category. CE is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance) and excess spread. The parity ratio (total assets to total liabilities) is expected to be 129.19% at closing. Liquidity support will be provided by a capitalized interest fund and debt service reserve fund.

Satisfactory Servicing Capabilities: Day-to-day servicing will be provided by VSAC, which has been servicing its own private loans since 1994. Fitch believes the servicing operations are acceptable at this time.

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 evaluated the sensitivity of the ratings assigned to VSAC 2014A to increased defaults, reduced recoveries and excess spread over the life of the transaction. Fitch's analysis found that the transaction displays some sensitivity to the above factors, showing a potential downgrade to BBB and CCC. For further discussion of our sensitivity analysis, please see the related presale report 'Vermont Student Assistance Corporation, Senior Series 2014A', dated May 21, 2014.

Additional information is available at 'www.fitchratings.com'

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (May 24, 2013);

--'U.S. Private Student Loan ABS (News - Alert) Criteria' (Jan. 29, 2014);

--'Structured Finance Tranche Thickness Criteria' (July 29, 2011).

--'Representations, Warranties and Enforcement Mechanism in Global Structure Finance Transactions' (April 17, 2012).

Applicable Criteria and Related Research: Vermont Student Assistance Corporation, Senior Series 2014A (US ABS)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748854

Global Structured Finance Rating Criteria - Effective from 24 May 2013 - 20 May 2014

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708661

U.S. Private Student Loan ABS Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=730956

Structured Finance Tranche Thickness Metrics

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=646951

Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=676496

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=831183

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. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE 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 WEBSITE.


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