NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed the senior notes issued by Michigan Finance Authority Series 25-A at 'A+sf'. The Rating Outlook for the senior notes remains Stable.
A complete list of rating actions follows at the end of this release.
KEY RATING DRIVERS
Adequate Collateral Quality:
The trust is collateralized by approximately $143.2 million of fixed- and variable-rate private student loans originated under the Michigan Alternative Student Loan Program. Since this trust closed within a year, the original default and recovery rate projections still applies, which was determined to be appropriate based on the latest data provided by the issuer.
Sufficient Credit Enhancement (CE):
CE is provided by overcollateralization, excess spread and external support provided by the Michigan Finance Authority. The Authority will reimburse the trust for up to $15 million of defaulted loans once the cumulative defaults exceed $14 million. The current cumulative default is $785,140. As of the September 2015 distribution report, total parity ratio is 106.17%. Excess cash will be released to the issuer when the total parity reaches 120% until the pool factor reaches 10%.
Adequate Liquidity Support:
Liquidity support for the trust is provided by a debt service reserve fund which is currently at $18,937,500. The reserve fund will be replenished to the maximum annual debt service with the support by a Moral Obligation provided by the state of Michigan (GOs rated 'AA', Outlook Stable).
Satisfactory Servicing Capabilities:
Firstmark Services LLC (Firstmark) is servicing the entire portfolio. Fitch views Firstmark as an acceptable servicer.
As Fitch's base case default proxy is derived primarily from historical collateral performance, actual performance may differ from the expected performance, resulting in higher loss levels than the base case. This will result in a decline in CE and remaining loss coverage levels available to the notes and may make certain note ratings susceptible to potential negative rating actions, depending on the extent of the decline in coverage. Fitch will continue to monitor the performance of the trust.
DUE DILIGENCE USAGE
No third-party due diligence was provided or reviewed in relation to this rating action.
Fitch affirms Michigan Finance Authority Series 25-A student loan revenue refunding bonds as follows:
--$12,000,000 Series 25-A 2016 'A+sf'; Outlook Stable;
--$11,000,000 Series 25-A 2017 'A+sf'; Outlook Stable;
--$11,000,000 Series 25-A 2018 'A+sf'; Outlook Stable;
--$11,000,000 Series 25-A 2019 'A+sf'; Outlook Stable;
--$11,000,000 Series 25-A 2020 'A+sf'; Outlook Stable;
--$11,000,000 Series 25-A 2021 'A+sf'; Outlook Stable;
--$11,000,000 Series 25-A 2022 'A+sf'; Outlook Stable;
--$11,000,000 Series 25-A 2023 'A+sf'; Outlook Stable;
--$11,000,000 Series 25-A 2024 'A+sf'; Outlook Stable;
--$10,000,000 Series 25-A 2025 'A+sf'; Outlook Stable;
--$9,000,000 Series 25-A 2026 'A+sf'; Outlook Stable;
--$9,000,000 Series 25-A 2027 'A+sf'; Outlook Stable;
--$9,000,000 Series 25-A 2028 'A+sf'; Outlook Stable;
--$7,000,000 Series 25-A 2029 'A+sf'; Outlook Stable;
--$7,000,000 Series 25-A 2030 'A+sf'; Outlook Stable;
--$5,000,000 Series 25-A 2031 'A+sf'; Outlook Stable.
Additional information is available at www.fitchratings.com.
Global Structured Finance Rating Criteria (pub. 06 Jul 2015)
U.S. Private Student Loan ABS Criteria (pub. 31 Jul 2015)
Dodd-Frank Rating Information Disclosure Form