NEW YORK--(BUSINESS WIRE)--Fitch Ratings affirms the student loan notes issued by Higher Education Loan Authority of the State of Missouri series 2010-2, Higher Education Loan Authority of the State of Missouri series 2011-1, and Higher Education Loan Authority of the State of Missouri series 2013-1. The Rating Outlooks are Stable for all notes.
KEY RATING DRIVERS
High Collateral Quality: In all the trusts, the 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. The current U.S. sovereign rating is at 'AAA' with a Stable Outlook.
Sufficient Credit Enhancement (CE): In all the trusts, CE is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance) and excess spread. As of January 2015, total parity for series 2010-2 is 112.96% (11.47% CE); for series 2013-1 - 104.55% (4.35%CE). As of February 2015, total parity for series 2011-1 is 106.26% (5.89%CE). Both Series 2010-2 and Series 2011-1 are full turbo structures therefore no cash is release until the note is paid in full. For Series 2013-1 cash can be released from the trust give that the specified OC target (greater of 9.09% of the adjusted pool balance or $30 million) is maintained.
Adequate Liquidity Support: Liquidity support for note is provided by a reserve account. For series 2010-2, the reserve is sized equal to the greater of 0.25% of pool balance or $1,247,713; for series 2011-1, 0.25% of pool balance or $874,963; and for series 2013-1 0.25% of pool balance or $1,449,864.
Acceptable Servicing Capabilities: Higher Education Loan Authority of the State of Missouri (MOHELA), as servicer, is responsible for servicing the portfolios. Pennsylvania Higher Education Assistance Agency (PHEAA) is the backup servicer for the portfolios. Fitch has reviewed the servicing operations of both MOHELA and PHEAA and believes them to be 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.
A comparison of the transaction's representations, warranties, and enforcement mechanisms (RW&Es) to those of typical RW&Es for FFELP asset-backed securities is available in the presale appendix. This presale appendix and Fitch's special report on 'Representations, Warranties, and Enforcement Mechanisms on Global Structured Finance Transactions,' may be accessed via the links provided below.
Fitch affirms the following ratings:
Higher Ed Loan Authority of the State of Missouri series 2010-2:
--Class A-1 note at 'AAAsf'; Outlook Stable.
Higher Ed Loan Authority of the State of Missouri series 2011-1:
--Series 2011-1 note at 'AAAsf'; Outlook Stable.
Higher Ed Loan Authority of the State of Missouri series 2013-1:
--Series 2013-1 note at 'AAAsf'; Outlook Stable.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (May 20, 2014);
--'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria' (June 23, 2014);
--'Higher Education Loan Authority of the State of Missouri, Series 2013-1 -- Appendix' (Jun. 4, 2013);
--'Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions' (Mar. 26, 2015).
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=982037
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