NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed the 'Asf' rating on the outstanding student loan notes issued by South Carolina Student Loan Corp., 2015-A Series. The Outlook remains Stable.
--Class A at 'Asf'; Outlook Stable.
KEY RATING DRIVERS
Collateral Performance: Approximately $185.4 million (84%) of the trust is collateralized by alternative student loans that were originated according to SCSLC's underwriting criteria under their Palmetto Assistance Loan (PAL) Program. The remaining 16% of the trust is collateralized by approximately $39.7 million of student loans originated under the Federal Family Education Loan Program (FFELP). The projected remaining defaults for SCSLC's private student loans are approximately 9.6% of the current collateral balance. A recovery rate of 15% was applied to private student loans defaults. Although majority of the trust's FFELP's student loans are rehabilitation loans, it is Fitch's opinion that the credit quality of the trust collateral is high, based on the guarantees on FFELP loans 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.
Payment Structure: Credit enhancement is provided by overcollateralization and excess spread, as there is no subordination notes in this trust. As of the September 2016 distribution report, parity has increased to 129.1% from 126.5% since last year. Liquidity support for the 2015-A notes is provided by a reserve account sized at the greater of 0.25% of the pool balance and 0.15% of the initial pool balance ($375,550). As of September 2016, the debt service reserve fund balance is approximately $565,668. The transaction is in turbo payment and no cash can be released until the bonds are paid in full.
Operational Risk: Day-to-day servicing will be provided by SCSLC. Nelnet Servicing LLC will act as backup servicer. Fitch considers SCSLC and Nelnet servicing operations to be acceptable at this time.
Under Fitch's 'Counterparty Criteria for Structured Finance and Covered Bonds', dated June 18, 2016, Fitch looks to its own ratings in analyzing counterparty risk and assessing a counterparty's creditworthiness. The definition for applicable rating criteria for investment obligations allows for the possibility of using investments not rated by Fitch, which represents a criteria variation. Fitch doesn't believe such variation has a measurable impact upon the ratings assigned.
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
USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10
Form ABS Due Diligence-15E was not provided to Fitch, or reviewed by Fitch 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. 26 Oct 2016)
Global Structured Finance Rating Criteria (pub. 27 Jun 2016)
Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria (pub. 10 Nov 2016)
U.S. Private Student Loan ABS Criteria (pub. 31 Jul 2015)
South Carolina Student Loan Corporation, 2015-A Series - Appendix
Dodd-Frank Rating Information Disclosure Form
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