NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed the following ratings for Brazos Higher Education Authority, Inc. student loan asset-backed notes series 2010-1 issued under the Amended and Restated 2004 Indenture of Trust (1993B):
Brazos Higher Education Authority, Inc., student loan asset-backed notes series 2010-1:
--Class A-1 'AAAsf'; Outlook Stable;
--Class A-2 'AAAsf'; 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 (CE): CE is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance), excess spread, and for the senior notes, subordination of the class B note. As of July 2015, parity is 109.74%. The trust is in turbo and has not released cash.
Adequate Liquidity Support: Liquidity support is provided by a debt service reserve fund currently sized at the greater of 0.25% of the outstanding notes' balance and $1,770,900. As of July 2015, the reserve account balance is approximately $1,770,900.
Acceptable Servicing Capabilities: Day-to-day servicing is provided by Xerox Education Services LLC(Xerox-ES), Navient Solutions, Inc.(f/k/a Sallie Mae, Inc.), AES/Pennsylvania Higher Education Assistance Agency, Great Lakes Educational Loan Services, Inc. (GLELSI) and Nelnet Servicing (Nelnet). Fitch believes that all servicing operations are acceptable at this time.
RATING SENSITIVITIES
Since the FFELP student loan ABS relies 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.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.
Additional information is available at www.fitchratings.com.
Applicable Criteria
Global Structured Finance Rating Criteria (pub. 06 Jul 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952
Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria (pub. 23 Jun 2014)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=750530
Additional Disclosures
Dodd-Frank Rating Information Disclosure Form
https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=991264
Solicitation Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=991264
Endorsement Policy
https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31
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