NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed the rating on the New Jersey Higher Education Student Assistance Authority (NJHESAA) student loan revenue bonds, Series 2009-A issued under the 2009 master trust indenture. The Rating Outlook is revised to Negative from Stable. Fitch's Global Structured Finance Rating Criteria and Private Student Loan Asset-Backed Securities (ABS) Criteria were used to review the transaction. The rating actions are detailed at the end of this press release.
KEY RATING DRIVERS
Collateral Quality: The collateral supporting NJHESAA's 2009 trust's notes consists entirely of private student loans originated and serviced by NJHESAA, which is not rated by Fitch. Over the past year, the trust has experienced an increase in gross defaults from 1.35% to 2.40% as a percentage of loans originated. Based upon the trust's performance, the lifetime projected gross defaults are expected to be close to 20%, which is higher than Fitch's initial expectations. A recovery rate of 60% was applied, which was determined to be appropriate based on the latest data provided by the issuer.
Negative Outlook: Fitch has assigned a Negative Outlook from Stable based upon increased gross defaults, causing a lower loss coverage multiple.
Credit Enhancement (CE): Although CE has declined, the current level is sufficient to provide a loss coverage multiple to support an 'Asf' rating on the bonds. The CE is provided by overcollateralization and excess spread. The parity ratio (total assets to total liabilities) is currently 105.14%.
Liquidity Support: Liquidity for the trust is provided by a debt service reserve fund which is $8,324,000, representing approximately 2.0% of the bond balance.
Servicing Capabilities: NJHESAA will service all of the loans in the trust. Fitch has reviewed the servicing operations of NJHESAA and views it to be an acceptable servicer of private student loans.
RATING SENSITIVITY
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 has revised the Outlook to Negative from Stable and affirmed the following Higher Education Student Assistance Authority of the State of New Jersey (NJHESAA), Student Loan Revenue Bonds, 2009 Indenture, Series 2009-A:
--Serial 2013-1 at 'Asf';
--Serial 2013-2 at 'Asf';
--Serial 2014-1 at 'Asf';
--Serial 2014-2 at 'Asf';
--Serial 2015-1 at 'Asf';
--Serial 2015-2 at 'Asf';
--Serial 2016-1 at 'Asf';
--Serial 2016-2 at 'Asf';
--Serial 2017-1 at 'Asf';
--Serial 2017-2 at 'Asf';
--Serial 2018-1 at 'Asf';
--Serial 2018-2 at 'Asf';
--Serial 2019-1 at 'Asf';
--Serial 2019-2 at 'Asf';
--Serial 2020-1 at 'Asf';
--Serial 2020-2 at 'Asf';
--Serial 2021-1 at 'Asf';
--Serial 2021-2 at 'Asf';
--Serial 2022 at 'Asf';
--Serial 2023 at 'Asf';
--Term 2024 at 'Asf';
--Serial 2025 at 'Asf';
--Serial 2026 at 'Asf';
--Term 2027 at 'Asf';
--Super Sinker 2027 at 'Asf';
--Serial 2028 at 'Asf';
--Serial 2029 at 'Asf';
--Term 2030 at 'Asf'.
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:
--'U.S. Private Student Loan ABS Criteria', Jan. 29, 2013;
--'Global Structured Finance Rating Criteria', June 6, 2012;;
--'Rating Guidelines for Moral Obligations', April 20, 2012.
Applicable Criteria and Related Research
Rating Guidelines for Moral Obligations
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=676745
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679923
U.S. Private Student Loan ABS Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=698293
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