Fitch Affirms Brazos Higher Education Authority 2004

NEW YORK--()--Fitch Ratings affirms the ratings of the notes issued by Brazos Higher Education Authority under the 2004 indenture of trust at 'AAAsf' for the senior notes and 'AAsf' for the subordinate notes. The Rating Outlook remains Stable for all notes.

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 (ED). The U.S. sovereign rating is currently 'AAA'.

Sufficient Credit Enhancement (CE): CE is provided by excess spread and overcollateralization. Parity levels continue to improve, and as of Nov. 30, 2014 were 104.86% and 119.53% for total and senior parity, respectively. Additionally, the class A notes benefit from subordination provided by the class B notes. Excess spread can only be released upon rating confirmation even if the parity thresholds of 101% total parity and 109% senior parity have been met.

Adequate Liquidity Support: Liquidity support is provided by a reserve account (0.75% of the outstanding principal amount of the bonds or $22,738,365).

Acceptable Servicing Capabilities: The loans are serviced by Xerox Education Services Inc., Great Lakes Education Loan Services Inc., Navient LLC (formerly Sallie Mae Servicing), Nelnet Inc., Pennsylvania Higher Education Assistance Agency and Student Assistance Foundation which in Fitch's opinion are acceptable servicers.

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.

Fitch has taken the following rating actions:

Brazos Higher Education Authority 2004

--2004-I class A-2 affirmed at 'AAAsf'; Outlook Stable;

--2004-I class B-1 affirmed at 'AAsf'; Outlook Stable;

--2005-1 class A-3 affirmed at 'AAAsf'; Outlook Stable;

--2005-1 class A-4 affirmed at 'AAAsf'; Outlook Stable;

--2005-1 class B-1 affirmed at 'AAsf'; Outlook Stable;

--2005-2 class A-10 affirmed at 'AAAsf'; Outlook Stable;

--2005-2 class A-11 affirmed at 'AAAsf'; Outlook Stable;

--2005-2 class A-12 affirmed at 'AAAsf'; Outlook Stable;

--2005-2 class B-2 affirmed at 'AAsf'; Outlook Stable;

--2005-3 class A-15 affirmed at 'AAAsf'; Outlook Stable;

--2005-3 class A-16 affirmed at 'AAAsf'; Outlook Stable;

--2005-3 class B-3 affirmed at 'AAsf'; Outlook Stable;

--2006-1 class I-A-2 affirmed at 'AAAsf'; Outlook Stable;

--2006-1 class I-A-3 affirmed at 'AAAsf'; Outlook Stable;

--2006-1 class I-B-1 affirmed at 'AAsf' ; Outlook Stable;

--2006-2 class I-A-9 affirmed at 'AAAsf'; Outlook Stable;

--2006-2 class I-A-10 affirmed at 'AAAsf'; Outlook Stable;

--2006-2 class I-A-13 affirmed at 'AAAsf'; Outlook Stable;

--2006-2 class I-A-14 affirmed at 'AAAsf'; Outlook Stable;

--2006-2 class I-A-15 affirmed at 'AAAsf'; Outlook Stable;

--2006-2 class I-B-2 affirmed at 'AAsf' ; Outlook Stable;

--2007-1 class I-A-1 affirmed at 'AAAsf'; Outlook Stable;

--2007-1 class I-A-2 affirmed at 'AAAsf'; Outlook Stable;

--2007-1 class I-A-3 affirmed at 'AAAsf'; Outlook Stable;

--2007-1 class I-A-4 affirmed at 'AAAsf'; Outlook Stable;

--2007-1 class I-A-5 affirmed at 'AAAsf'; Outlook Stable.

--2007-1 class I-B-1 affirmed at 'AAsf'; Outlook Stable.

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

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (March 2015);

--'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria' (June 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=864268

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=982520

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Primary Analyst
Nicole Edwards
Director
+1 212-908-9114
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Committee Chairperson
Kevin Corrigan
Senior Director
+1 212-908-0156
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Nicole Edwards
Director
+1 212-908-9114
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Committee Chairperson
Kevin Corrigan
Senior Director
+1 212-908-0156
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com