Fitch Affirms North Texas Higher Education Authority, 2011-1 Indenture of Trust; Outlook Stable

NEW YORK--()--Fitch Ratings has affirmed the senior notes at 'AAAsf' issued by North Texas Higher Education Authority, Inc., 2011-1 Indenture of Trust. The Rating Outlook remains Stable for the senior notes.

KEY RATING DRIVERS

High Collateral Quality: The trust 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 'AAA' with a Stable Outlook.

Sufficient Credit Enhancement: CE is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance) and excess spread. As of October 2015 distribution date, total parity is 114.56% (12.71% CE). The trust is a full turbo structure therefore no cash is released until the note is paid in full.

Adequate Liquidity Support: Liquidity support for note is provided by a reserve account. The reserve is sized equal to the greater of 0.50% of the aggregate principal amount of the outstanding bonds as of the close of business on the last day of the immediately preceding collection period or $315,300.

Acceptable Servicing Capabilities: Higher Education Servicing Corporation (HESC) is the master servicer and will also provide day-to-day servicing for 20.59% of the loans being securitized. Edfinancial Services, LLC (Edfinancial) will service 79.31% of the collateral portfolio, and Nelnet Servicing, LLC (Nelnet) will service the remaining 0.11%. Pennsylvania Higher Education Assistance Agency (PHEAA) will be the backup servicer for those loans serviced by HESC and Edfinancial. All servicers have demonstrated adequate servicing capabilities.

Fitch reviewed North Texas Higher Education Authority, Inc., 2011-1 Indenture of Trust using the agency's existing and proposed FFELP ABS criteria, which are listed below.

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 build-up 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.

Fitch has affirmed the following rating:

North Texas Higher Education Authority, Inc. 2011-1 Indenture of Trust

--Series 2011-1 note at 'AAAsf'; Outlook Stable.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158

Criteria for Interest Rate Stresses in Structured Finance Transactions and Covered Bonds (pub. 19 Dec 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=838868

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

Rating Criteria for Structured Finance Servicers (pub. 23 Apr 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=864375

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

Related Research

Exposure Draft: Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=872755

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=994409

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=994409

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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Contacts

Fitch Ratings
Primary Analyst
Victoria Ohorodnyk
Associate Director
+1-212-908-0866
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Michael Dean
Managing Director
+1-212-908-0556
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
Email: sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Victoria Ohorodnyk
Associate Director
+1-212-908-0866
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Michael Dean
Managing Director
+1-212-908-0556
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
Email: sandro.scenga@fitchratings.com