Fitch Affirms VSAC Senior Series 2014A Bonds; Outlook Stable

NEW YORK--()--Fitch Ratings has affirmed the senior series 2014A education loan revenue bonds of the Vermont Student Assistance Corporation (VSAC) issued under the Indenture of Trust and Series 2014A Supplemental Indenture dated June 1, 2014 as follows:

--Serial 2019 at 'Asf'; Outlook Stable;

--Serial 2020 at 'Asf'; Outlook Stable;

--Serial 2021 at 'Asf'; Outlook Stable;

--Serial 2022 at 'Asf'; Outlook Stable;

--Serial 2023 at 'Asf'; Outlook Stable;

--Serial 2024 at 'Asf'; Outlook Stable;

--Serial 2025 at 'Asf'; Outlook Stable;

--Serial 2026 at 'Asf'; Outlook Stable;

--Serial 2027 at 'Asf'; Outlook Stable;

--Serial 2028 at 'Asf'; Outlook Stable;

--Serial 2029 at 'Asf'; Outlook Stable;

--Serial 2030 at 'Asf'; Outlook Stable;

--Serial 2031 at 'Asf'; Outlook Stable;

--Serial 2032 at 'Asf'; Outlook Stable;

--Serial 2033 at 'Asf'; Outlook Stable.

KEY RATING DRIVERS

Adequate Collateral Quality: The trust is collateralized by approximately $33.75 million of fixed-rate private student loans. The loans were originated according to the underwriting criteria for VSAC's Fixed-Rate Private Student Advantage Loan Program. Fitch's current lifetime gross default projection is 16% - 18%, with a 20% recovery assumption.

Sufficient Credit Enhancement: Credit enhancement is provided by overcollateralization and excess spread. Total parity for the senior series 2014A class A notes is 132.64% as of March 2016. The trust can release cash given that the parity threshold of 130.50% is maintained.

Adequate Liquidity Support: Liquidity support for the notes is provided by a reserve account that is sized at the greater of 2% of the aggregate principal amount of the senior bonds outstanding and 1% of the initial aggregate principal amount of the series 2014A bonds at closing. The reserve fund is $598,400 as of March 2016. Additionally, there is a capitalized interest account currently sized at $1,370,000 which reduces according to a schedule which terminates on Dec. 15, 2017.

Acceptable Servicing Capabilities: Day-to-day servicing is provided by VSAC. Fitch believes the servicing operations are acceptable at this time.

RATING SENSITIVITIES

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.

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 Servicing Continuity Risk in Structured Finance (pub. 17 Dec 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=875586

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

U.S. Private Student Loan ABS Criteria (pub. 31 Jul 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=868836

Related Research

Vermont Student Assistance Corporation, Senior Series 2014A -- Appendix
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748907

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form
https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1004761

Solicitation Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1004761

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

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Contacts

Fitch Ratings
Primary Analyst:
Jeffrey Prackup, +1-212-908-0839
Director
Fitch Ratings, Inc.
33 Whitehall St.
New York, NY 10004
or
Committee Chairperson:
Tracy Wan, +1-212-908-9171
Senior Director
or
Media Relations:
Sandro Scenga, +1-212-908-0278
New York
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst:
Jeffrey Prackup, +1-212-908-0839
Director
Fitch Ratings, Inc.
33 Whitehall St.
New York, NY 10004
or
Committee Chairperson:
Tracy Wan, +1-212-908-9171
Senior Director
or
Media Relations:
Sandro Scenga, +1-212-908-0278
New York
sandro.scenga@fitchratings.com