NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed the senior student loan notes issued by Brazos Higher Education Authority, Inc.- Amended and Restated 2004 Indenture Trust (1993B) at 'AAAsf'. The subordinate notes are not rated.
KEY RATING DRIVERS
High Collateral Quality: The trust collateral is comprised of 100% of 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 at least 97% reinsurance of principal and accrued interest provided by the U.S. Department of Education. Fitch currently rates the U.S. 'AAA' with a Stable Outlook.
Sufficient Credit Enhancement (CE): CE is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance), excess spread, and for the class A notes, subordination provided by the class B notes. As of the Jul. 2014 servicing report, senior parity is 108.08%. The trust is in turbo and no excess cash can be released until all the notes are paid in full.
Adequate Liquidity Support: Liquidity support is provided by a Debt Service Reserve Account sized at 0.25% of the outstanding balance of the notes with a floor of $1.77 million.
Acceptable Servicing Capabilities: Day-to-day servicing is provided by Xerox Education Services LLC., Navient Solutions, Inc. (FKA Sallie Mae, Inc.), Pennsylvania Higher Education Assistance Agency and Great Lakes Educational Loan Services, Inc. Fitch believes that all servicing operations are acceptable at this time.
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 has affirmed the following ratings:
Brazos Higher Education Authority 1993B Series 2010:
--Class A-1 at 'AAA'; Outlook Stable;
--Class A-2 at 'AAA'; Outlook Stable.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria' (June 23, 2014);
--'Global Structured Finance Rating Criteria' (Aug. 4, 2014).
Applicable Criteria and Related Research:
Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=750530
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754389
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=893275
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