Fitch Expects to Rate Massachusetts Educational Financing Auth Issue I Series 2014 Ed Loan Revs

NEW YORK--()--Fitch Ratings expects to rate Massachusetts Educational Financing Authority (MEFA) education loan revenue bonds, Issue I, series 2014 as follows:

--$184,800,000 series 2014 'Asf'; Outlook Stable.

KEY RATING DRIVERS

Adequate Collateral Quality: The master trust will be collateralized by approximately $485 million existing fixed-rate private student loans originated with proceeds from certain earlier bond issuances and approximately $195 million new fixed-rate private student loans to be originated from deal closing based on a loan origination schedule that will end June 30, 2015. All existing loans have been credit tested and new fixed-rate private student loans will be originated according to the underwriting criteria for the MEFA loan program and will consist of loans originated under MEFA's immediate repayment, interest-only, deferment, and fixed-rate student alternative loan products.

Sufficient Credit Enhancement: Transaction cash flows were satisfactory under all stressed scenarios of Fitch's 'Asf' rating category. Credit enhancement (CE) is provided by overcollateralization (OC) and excess spread. The initial CE for the notes is expected to be approximately 8.06%. The initial parity ratio is expected to be approximately 108.76%, with a release level of 110.75%.

Adequate Liquidity Support: Liquidity support for Issue I is provided by a debt service reserve fund, which will be fully funded at closing at $9,395,300, 1.4% of the bond balance. The required reserve account will be the lessor of $8 million floor and 1.4% of the current bond balance.

Satisfactory Servicing Capabilities: Day-to-day servicing will be provided by Xerox. Xerox has been servicing MEFA loans since 2003. Fitch views its servicing capabilities as highly effective.

SENSITIVITY ANALYSIS

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 and/or prepayment speeds than the base case. This will result in a decline in available CE and the remaining loss coverage levels available to the notes. Therefore, note ratings may be susceptible to potential negative rating actions, depending on the extent of the decline in the coverage.

Rating sensitivity results should only be considered as one potential outcome, as the transaction is exposed to multiple dynamic risk factors. Rating sensitivity should not be used as an indicator of future rating performance.

Fitch's stress analysis is discussed in the presale titled 'Massachusetts Educational Financing Authority, Issue I, Series 2014', dated April 29, 2014.

The presale report is available to all investors on Fitch's website at 'www.fitchratings.com'. For more information about Fitch's comprehensive subscription service Fitch Research, which includes all presale reports, surveillance, and credit reports on more than 20 asset classes, contact product sales at +1-212-908-0800 or at 'webmaster@fitchratings.com'.

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

Applicable Criteria and Related Research:

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

--'U.S. Private Student Loan ABS Criteria' (January 2014).

Applicable Criteria and Related Research: Massachusetts Educational Financing Authority, Issue I, Series 2014 (US ABS)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=747279

Global Structured Finance Rating Criteria

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

U.S. Private Student Loan ABS Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=730956

Additional Disclosure

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Contacts

Fitch Ratings
Primary Analyst
Autumn Mascio
Director
+1-212-908-0896
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Harry Kohl
Associate Director
+1-212-908-0837
or
Committee Chairperson
Tracy Wan
Senior Director
+1-212-908-9171
or
Media Relations
Sandro Scenga, New York, +1 212-908-0278,
sandro.scenga@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst
Autumn Mascio
Director
+1-212-908-0896
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Harry Kohl
Associate Director
+1-212-908-0837
or
Committee Chairperson
Tracy Wan
Senior Director
+1-212-908-9171
or
Media Relations
Sandro Scenga, New York, +1 212-908-0278,
sandro.scenga@fitchratings.com