NEW YORK--(BUSINESS WIRE)--Fitch Ratings affirms the Nelnet Student Loan Trust 2013-3 senior note at 'AAAsf' and the subordinate note at 'A+sf'. The Rating Outlook remains Stable.
KEY RATING DRIVERS
High Collateral Quality: The trust collateral is comprised of 100% of Federal Family Education Loan Program (FFELP) loans including 24.58% of rehabilitated FFELP loans. The credit quality of the trust collateral is 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. Fitch affirmed at 'AAA' and assigned a Stable Outlook to the U.S. sovereign rating on March 24, 2014.
Sufficient Credit Enhancement: CE is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance) and excess spread, and for the senior notes, subordination of the class B note. As of February 2014, total parity was 101.01% (1.00% CE) and senior parity was 103.90% (3.75% CE). The trust has been releasing cash given the Specified Overcollateralization Amount is the greater of 1% of the adjusted pool balance and $2,000,000 is maintained.
Adequate Liquidity Support: Liquidity support is provided by a reserve account by a $765,000.00 (0.50% of the outstanding notes).
Acceptable Servicing Capabilities: Day to day servicing is provided by Nelnet, Pennsylvania Higher Education Assistance Agency (PHEAA) and Xerox Education Services Inc. (XES). In Fitch's opinion, all servicers are 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.
Initial Key Rating Drivers and Rating Sensitivity are further described in Fitch's Presale report published April 22, 2013.
Fitch has affirmed Nelnet Student Loan Trust 2013-3 as follows:
-- Class A note at AAAsf; Outlook Stable;
-- Class B note at A+sf; Outlook Stable.
A comparison of the transaction's RW&Es to those of typical RW&Es for student loans is available by accessing the reports and links below:
-- 'Nelnet Student Loan Trust 2013-3 - Appendix', dated April 22, 2013;
-- 'Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions -- Amended', dated April 17, 2012.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
-- 'Global Structured Finance Rating Criteria' dated May 24, 2013;
-- 'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria' dated 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=827010
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