Fitch Rates Michigan Finance Authority, Series 2015-1

NEW YORK--()--Fitch Ratings rates Michigan Finance Authority asset-backed notes, series 2015-1 (series 2015-1) as follows:

--$302,600,000 floating rate class A notes 'AAAsf'; Outlook Stable;

--$9,000,000 floating rate class B notes 'A+sf'; Outlook Stable.

KEY RATING DRIVERS

High Collateral Quality: The trust collateral comprises Federal Family Education Loan Program (FFELP) loans with guaranties provided by eligible guarantors and reinsurance provided by the U.S. Department of Education (ED) for at least 97% of principal and accrued interest. Fitch's current U.S. sovereign rating is 'AAA' with a Stable Outlook.

Sufficient Credit Enhancement: Cash flow scenarios for the series 2015-1 notes were satisfactory under Fitch's 'AAAsf' and 'A+sf' stress. Total credit enhancement (CE) is provided by overcollateralization and excess spread. At closing, senior and total parity is expected to be 103.29% and 100.30% respectively. No excess cash will be released from the trust until all notes are paid in full.

Adequate Liquidity Support: Liquidity support for the series 2015-1 notes is provided by a debt service reserve fund sized at $771,954, which will be funded at closing with note proceeds. The debt service reserve fund has a specified reserve requirement amount defined as a minimum of 0.25% of the ending pool balance as of the current collection period and 0.15% of the original pool balance ($463,172).

Acceptable Servicing Capabilities: The series 2015-1 portfolio will be serviced by Great Lakes Educational Loan Services, Inc. (Great Lakes), Nelnet Servicing, LLC (Nelnet), and Navient Solutions, Inc. (Navient). Fitch deems Great Lakes, Nelnet, and Navient to be adequate servicers of FFELP 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 CE driven by positive excess spread given favorable basis factor conditions could lead to future upgrades.

Key Rating Drivers and Rating Sensitivities are further described in the presale report titled 'Michigan Finance Authority, Series 2015-1', dated March 5, 2015 available on www.fitchratings.com, or by clicking on the link.

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

A comparison of the transaction's Representations, Warranties & Enforcement Mechanisms (RW&Es) to those of typical RW&Es for that asset class is available by accessing the appendix dated March 5, 2014, available on Fitch's website at www.fitchratings.com.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (August 2014);

--'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria' (June 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=750530

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=981796

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Contacts

Fitch Ratings
Primary Analyst
Emily Lee
Director
+1-212-908-0667
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Harry Kohl
Associate Director
+1-212-908-0837
or
Committee Chairperson
Steven Stubbs
Senior Director
+1-212-908-0676
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
Email: sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Emily Lee
Director
+1-212-908-0667
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Harry Kohl
Associate Director
+1-212-908-0837
or
Committee Chairperson
Steven Stubbs
Senior Director
+1-212-908-0676
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
Email: sandro.scenga@fitchratings.com