Fitch Affirms on MOHELA 2010-2 & MOHELA 2011-1 Notes

NEW YORK--()--Fitch Ratings affirms the class A-1 notes currently rated 'AAAsf' by both Higher Education Loan Authority of the State of Missouri, series 2010-2 (MOHELA 2010-2) and Higher Education Loan Authority of the State of Missouri, series 2011-1 (MOHELA 2011-1). The Rating Outlook remains Stable on both trust's notes.

KEY RATING DRIVERS

High Collateral Quality: Both MOHELA 2010-2 and MOHELA 2011-1 collateral consists of 100% of Federal Family Education Loan Program (FFELP) loans. The credit quality of the trust collaterals are high, in Fitch's opinion, based on the guarantees provided by the transaction's eligible guarantors and reinsurance provided by the U.S. Department of Education (ED) for at least 97% of principal and accrued interest. On March 24, 2014, Fitch affirmed the U.S. sovereign rating at 'AAA' and assigned a Stable Outlook.

Sufficient Credit Enhancement: Credit Enhancement (CE) is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance) and excess spread. As of January 2014, MOHELA 2010-2's total parity is 110.31% (9.34% CE). As of February 2014, MOHELA 2011-1's total parity is 105.17% (4.92% CE). Both trusts have a full turbo structure therefore no cash is released until the notes are paid in full.

Adequate Liquidity Support: Liquidity support is provided by a reserve account. The reserve is sized equal to the greater of 0.25% of the pool balance, and $1,247,713 for MOHELA 2010-2; for MOHELA 2011-1, the reserve is sized equal to the greater of 0.25% of the pool balance, and $874,963.

Acceptable Servicing Capabilities: Higher Education Loan Authority of the State of Missouri (MOHELA) and Pennsylvania Higher Education Assistance Agency (PHEAA) will be responsible for servicing both trusts. PHEAA will also act as backup servicer for the portion of the collateral pool that is serviced by MOHELA for both trusts. Fitch has reviewed the servicing operations of both MOHELA and PHEAA and believes them to be acceptable servicers of FFELP student loans.

RATING SENSITIVITIES

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 takes the following rating action as indicated:

Higher Ed Loan Authority of the State of Missouri Series 2010-2:

--Class A-1 note affirmed at 'AAAsf'; Outlook Stable.

Higher Ed Loan Authority of the State of Missouri Series 2011-1:

--Class A-1 note affirmed at 'AAAsf'; Outlook Stable.

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

Applicable Criteria and Related Research:

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

--'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 -- Amended

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708795

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=826790

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 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.

Contacts

Fitch Ratings
Primary Analyst:
Paul Jiang, +1-212-908-9120
Analyst
One State Street Plaza
New York, NY 10004
or
Committee Chairperson:
Tracy Wan, +1-212-908-9171
Senior Director
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
sandro.scenga@fitchratings.com

Sharing

Contacts

Fitch Ratings
Primary Analyst:
Paul Jiang, +1-212-908-9120
Analyst
One State Street Plaza
New York, NY 10004
or
Committee Chairperson:
Tracy Wan, +1-212-908-9171
Senior Director
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
sandro.scenga@fitchratings.com