NEW YORK--()--Fitch Ratings affirms the senior notes issued by New Jersey Higher Education Student Assistance Authority 2010 FFELP at 'AAAsf'. The Rating Outlook on the notes is Negative.
The collateral supporting the notes is composed of student loans originated under the Federal Family Education Loan Program (FFELP). A detailed list of rating actions follows at the end of this press release.
Key Rating Drivers
Fitch affirms the ratings on the senior notes for the New Jersey Higher Education Student Assistance Authority 2010 based on the following:
High Collateral Quality: The trust collateral consists of 100% FFELP student loans with guaranties provided by the transaction's eligible guarantors for at least 97% of principal and accrued interest.
Negative Rating Outlooks Assigned: Fitch's Rating Outlook remains Negative on the notes, which reflects Fitch's Negative Rating Outlook on the long-term foreign and local currency Issuer Default Ratings (IDRs) of the U.S.
Sufficient Credit Enhancement (CE): CE is provided by overcollateralization (OC) and excess spread, where OC is equal to $11,158,106 (10.32% of the trust's total assets). The parity ratio has been increasing and is 111.50% as of Dec. 31, 2012.
Adequate Liquidity Support: The debt service reserve fund balance is $1,012,150, representing 1.04% of the outstanding note balance.
Satisfactory Servicing Capabilities: In Fitch's opinion, the trust's servicing entities Pennsylvania Higher Education Assistance Agency (PHEAA), and Sallie Mae, Inc. (Sallie Mae) are acceptable servicers of FFELP loans.
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 credit enhancement driven by positive excess spread given favorable basis factor conditions could lead to future upgrades.
Fitch has taken the following rating actions:
New Jersey Higher Education Student Assistance Authority 2010 FFELP:
--Class A-1 affirmed at 'AAAsf'; Outlook Negative;
--Class A-2 affirmed at 'AAAsf'; Outlook Negative.
Additional information is available at www.fitchratings.com. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (June 6, 2012);
--'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria' (April 3, 2012).
Applicable Criteria and Related Research
Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria
Global Structured Finance Rating Criteria