NEW YORK--(BUSINESS WIRE)--Fitch Ratings affirms the long- and short-term ratings of New Hampshire Health and Education Facilities Authority adjustable rate education loan revenue bonds series 2011(NHHEFA series 2011).
The ratings will expire upon the earliest of: (a) Oct. 15, 2015, the initial stated expiration date of the letters of credit (LOCs), unless such date is extended; (b) conversion to an alternate mode; (c) any prior termination of the LOCs; and (d) defeasance of the bonds.
KEY RATING DRIVERS
Fully supported LOC: The ratings are based on the support provided by a direct-pay LOC issued by Royal Bank of Canada (RBC). RBC is obligated to make payments of principal of and interest on the bonds upon maturity, acceleration and redemption, as well as for the purchase price of tendered bonds. Fitch's rating of Royal Bank of Canada was affirmed at 'AA/F1+'; Outlook Stable in January 2015.
The ratings sensitivity below is for RBC and is applicable to NHHEFA series 2011 due to the direct linkage with the ratings of RBC.
Given RBC's already high level of ratings, Fitch does not expect any upside to RBC's ratings over a medium-term time horizon. Alternatively, ratings could be downgraded to peer levels should RBC's credit performance deteriorate at a faster rate than other similarly rated entities on a global basis.
Fitch believes that all Canadian banks, including RBC, are vulnerable to credit deterioration in their domestic loan portfolios given high levels of consumer indebtedness in Canada, combined with Fitch's view of some overvaluation in the Canadian housing market. This limits housing affordability and makes consumers particularly susceptible to negative shocks to their income levels. Should the rapid decline in global oil prices cause an economic slowdown in Canada that impacts employment levels, this could hasten potential credit deterioration, which could further pressure RBC's ratings or Rating Outlook.
Fitch has affirmed the following ratings:
New Hampshire Health and Education Facilities Authority Series 2011
--2011A notes at 'AAsf/F1+'; Outlook Stable;
--2011B notes at 'AAsf/F1+'; Outlook Stable.
Additional information is available at www.fitchratings.com.
Global Structured Finance Rating Criteria (pub. 31 Mar 2015)
Rating Guidelines for Letter of Credit-Supported Bonds and Commercial Paper (pub. 21 May 2015)
Dodd-Frank Rating Information Disclosure Form