Fitch Affirms SMS Student Loan Trust 1998-A

NEW YORK--()--Fitch Ratings has affirmed at 'AAAsf' the senior and subordinate notes issued by SMS Student Loan Trust 1998-A. The Rating Outlook for the senior and subordinate notes, which is tied to the sovereign rating of the U.S. government, remains Negative. Fitch used its 'Global Structured Finance Rating Criteria' and 'Rating U.S. Federal Family Education Loan Program Student Loan ABS' to review the ratings.

KEY RATING DRIVERS

High Collateral Quality: The trust collateral consists of Federal Family Education Loan Program (FFELP) loans with guaranties provided by eligible guarantors and reinsurance provided by the U.S. Department of Education (ED) for at least 97% of principal and accrued interest.

Sufficient Credit Enhancement: Cash flow scenarios for class A and B notes were satisfactory under Fitch's stresses. The ratings on the senior and subordinate notes are affirmed based on stable trust performance and the sufficient level of credit to cover the applicable risk factor stresses. While both the senior and subordinate notes will benefit from over-collateralization and future excess spread, the senior notes also benefit from subordination provided by the class B note. Total parity increased to 101.11%, and senior parity increased to 147.12%. Total credit enhancement (CE) is provided by overcollateralization (OC; about $ 756,250), excess spread and, in the case of class A notes, 1.10% subordination provided by the class B notes.

Adequate Liquidity Support: Liquidity support for SMS 1998-A's notes is provided by a $756,250 reserve account.

Satisfactory Servicing Capabilities: Sallie Mae, Inc., as servicer, will be responsible for servicing the 1998-A portfolio. Fitch believes Sallie Mae is an acceptable servicer of FFELP student loans.

RATING SENSITIVITIES

Since FFELP student loan ABS relies on the U.S. government to reimburse defaults, 'AAA'sf 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 affirmed the following ratings:

SMS Student Loan Trust 1998-A:

--Class A-2 at 'AAAsf'; Outlook Negative;

--Class B at 'AAAsf'; Outlook Negative;

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

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' (May 17, 2013).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

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

Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria - Effective Apr. 7, 2011 to Apr. 3, 2012

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=616766

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=803202

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Contacts

Fitch Ratings
Primary Analyst
Lisette Figueroa
Analyst
+1-212-908-0836
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Committee Chairperson
Tracy Wan
Senior Director
+1-212-908-9171
or
Media Relations:
Sandro Scenga, +1-212-908-0278 (New York)
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Lisette Figueroa
Analyst
+1-212-908-0836
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Committee Chairperson
Tracy Wan
Senior Director
+1-212-908-9171
or
Media Relations:
Sandro Scenga, +1-212-908-0278 (New York)
sandro.scenga@fitchratings.com