Fitch Affirms New Mexico Educational Assistance Foundation - 1998 Trust Indenture

NEW YORK--()--Fitch Ratings affirms the New Mexico Educational Assistance Foundation - 1998 Trust Indenture senior notes at 'AAAsf'. The Rating Outlook remains Stable.

KEY RATING DRIVERS

High Collateral Quality: The trust collateral consists of 100% Federal Family Education Loan Program (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 currently rates the U.S. 'AAA' with 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 June 2014, total parity is 111.25%, and the trust cannot release excess cash until the cash release parity level of 130.00% is met and the series 2013-1 bonds have been paid in full.

Adequate Liquidity Support: Liquidity support is provided by a $62,000,000 supplemental reserve subaccount and a debt service reserve fund sized at the greater of 1% of the bonds outstanding or $1,000,000, each funded at closing. The supplemental reserve subaccount will step down in value starting on the September 2014 distribution date, and will be fully released as of the September 2017 distribution date.

Acceptable Servicing Capabilities: Servicing is provided by the New Mexico Educational Assistance Foundation (NMEAF). Great Lakes Education Loan Services, Inc. (Great Lakes) is the backup servicer. Fitch has reviewed the servicing operations of both NMEAF and Great Lakes and believes them to be acceptable servicers of FFELP student loans.

RATING SENSITIVITIES

Since the FFELP student loan ABS relies 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 CE driven by positive excess spread given favorable basis factor conditions could lead to future upgrades.

Fitch has affirmed the following ratings:

New Mexico Educational Assistance Foundation - 1998 Trust Indenture:

--Series 2001A-1 at 'AAAsf', Outlook Stable;

--Series 2002A-2 at 'AAAsf', Outlook Stable;

--Series 2003A-2 at 'AAAsf', Outlook Stable;

--Series 2004A-1 at 'AAAsf', Outlook Stable;

--Series 2007A-1 at 'AAAsf', Outlook Stable;

--Series 2007A-2 at 'AAAsf', Outlook Stable;

--Series 2009B-2015 at 'AAAsf', Outlook Stable;

--Series 2009B-2016 at 'AAAsf', Outlook Stable;

--Series 2009B-2017 at 'AAAsf', Outlook Stable;

--Series 2009B-2018 at 'AAAsf', Outlook Stable;

--Series 2009B-2019 at 'AAAsf', Outlook Stable;

--Series 2009B-2020 at 'AAAsf', Outlook Stable;

--Series 2009C-2014 at 'AAAsf', Outlook Stable;

--Series 2009C-2015 at 'AAAsf', Outlook Stable;

--Series 2013-1 A-1 at 'AAAsf', Outlook Stable.

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

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (Aug. 4, 2014);

--'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria' (June 23, 2014).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754389

Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria

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=850534

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Contacts

Fitch Ratings
Primary Analyst
Harry Kohl, +1 212-908-0837
Associate Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Tracy Wan, +1 212-908-9171
Senior Director
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com

Sharing

Contacts

Fitch Ratings
Primary Analyst
Harry Kohl, +1 212-908-0837
Associate Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Tracy Wan, +1 212-908-9171
Senior Director
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com