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Fitch Affirms State of North Carolina State Education Assistance Authority Series 2012-1

NEW YORK--(BUSINESS WIRE)--Fitch Ratings affirms the North Carolina State Education Assistance Authority Series 2012-1 notes at 'AAAsf' with a Stable Rating Outlook.

KEY RATING DRIVERS

High Collateral Quality: The collateral consists of 100% of 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. Fitch currently rates the U.S. 'AAA' with a Stable Outlook.

Sufficient Credit Enhancement: The notes benefit from overcollateralization (OC; the excess of trust's asset balance over bond balance) and excess spread. As of March 2014, reported parity is 105.11% (4.86% CE). The trust is in turbo and cannot release cash until all of the notes are paid in full.

Adequate Liquidity Support: Liquidity support is provided by a Debt Service Reserve Fund sized at the greater of 0.25% of the pool balance and $623,544.

Acceptable Servicing Capabilities: College Foundation Inc. as servicer, and Nelnet Servicing LLC, as backup servicer, responsible for servicing the trust. Fitch believes both College Foundation Inc. and Nelnet to be acceptable servicers of FFELP student loans.

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 buildup of credit enhancement driven by positive excess spread given favorable basis factor conditions could lead to future upgrades.

Initial Key Rating Drivers and Rating Sensitivity further described in the Presale report published on May 20, 2011.

Fitch has taken the following rating action:

State of North Carolina State Education Assistance Authority Series 2012-1:

--Class A note affirmed at AAAsf; Outlook Stable.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'State of North Carolina State Education Assistance Authority, Series 2012-1 - Appendix' (Aug. 2, 2012) ;

--'Global Structured Finance Rating Criteria' (May 20, 2014);

--'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria' (June 23, 2014).

Applicable Criteria and Related Research:

State of North Carolina State Education Assistance Authority, Series 2012-1 -- Appendix

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=685791

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748821

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

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708795

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=837913

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Contacts

Fitch Ratings
Primary Analyst
Jared Smith
Analyst
+1-212-908-0371
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Michael Dean
Senior Director
+1-212-908-0556
or
Media Relations
Sandro Scenga, New York, Tel: +1 212-908-0278
sandro.scenga@fitchratings.com