NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed the series 2011B term credit note issued by Iowa Student Loan Liquidity Corporation (ISL) at 'Asf'. The Rating Outlook remains Stable.
The affirmation of term credit note is based on a sufficient loss coverage multiple commensurate with an 'Asf' rating.
KEY RATING DRIVERS
Collateral Quality: As of July 2016, the trust is secured by $75 million of private student loans originated under ISL's private student loan programs. The projected remaining defaults are expected to range between 9%-12% as a percentage of the current principal balance. A recovery rate of 20% was applied which was determined to be appropriate based on data provided by the issuer.
Credit Enhancement: Credit enhancement is provided by overcollateralization and excess spread. As of July 2016, ISL reported the total parity at 187% (excluding any defaulted loans). The trust cannot release any excess cash until all the notes have been fully redeemed.
Liquidity Support: Liquidity support for the trust is provided by a debt service reserve fund that is sized to the greater of 0.50% of the outstanding pool balance and 0.15% of the initial pool balance. Currently, the debt service reserve fund balance is $404,274.
Servicing Capabilities: Day-to-day servicing is provided by Aspire Resources Inc., a wholly owned subsidiary of ISL with Pennsylvania Higher Education Assistance Agency as the back-up servicer. Fitch believes these servicing operations are acceptable servicers of student loans due to their long servicing history.
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 bonds and may make certain bond 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.
USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10
No third-party due diligence was provided or reviewed in relation to this rating action.
Additional information is available at www.fitchratings.com.
Counterparty Criteria for Structured Finance and Covered Bonds (pub. 01 Sep 2016)
Criteria for Interest Rate Stresses in Structured Finance Transactions and Covered Bonds (pub. 17 May 2016)
Global Structured Finance Rating Criteria (pub. 27 Jun 2016)
U.S. Private Student Loan ABS Criteria (pub. 31 Jul 2015)
Dodd-Frank Rating Information Disclosure Form
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