|[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
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
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)
Global Structured Finance Rating Criteria - Effective from 24 May 2013 -
20 May 2014
U.S. Private Student Loan ABS Criteria
Structured Finance Tranche Thickness Metrics
Representations, Warranties, and Enforcement Mechanisms in Global
Structured Finance Transactions
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CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH
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