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Fitch Expects to Rate Mississippi Higher Education Corporation, Series 2014-1; Presale Issued

NEW YORK--(BUSINESS WIRE)--Fitch Ratings expects to rate Mississippi Higher Education Corporation, Series 2014-1 as follows:

--$387,000,000 Series 2014-1 A-1 notes 'AAAsf(EXP)'; Outlook Stable.

KEY RATING DRIVERS

High Collateral Quality: The trust collateral consists of 100% 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 at least 97% reinsurance of principal and accrued interest provided by the U.S. Department of Education (ED). Fitch currently rates the U.S. at 'AAA' with a Stable Outlook.

Sufficient Credit Enhancement: The cash flow results for the class A notes were satisfactory under Fitch 'AAAsf' stresses. At closing, total parity is expected to be approximately 101.42% and senior parity is expected to be 104.04%. Total credit enhancement (CE) at closing is provided by overcollateralization of $5,634,061, excess spread and, in the case of the class A notes, approximately 2.52% subordination provided by the class B notes. The class B notes will not be rated. This trust will not release cash as this is a full turbo structure.

Adequate Liquidity Support: Liquidity was initially provided by a $992,500 reserve account (0.25% of outstanding note balance) and a Capitalized Interest Fund Account at $6,523,513, funded at closing with note proceeds. The reserve fund requirement is 0.25% of the outstanding note balance with a floor of $600,000.

Acceptable Servicing Capabilities: ACS Loan Services LLC will be responsible for servicing 100% of the MHEAC 2014-1 portfolio. Nelnet Servicing, LLC will serve as the back-up servicer. In Fitch's opinion, both entities are acceptable servicers of FFELP student loans.

RATING SENSITIVITY

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 CE driven by positive excess spread given favorable basis factor conditions could lead to future upgrades.

Key Rating Drivers and Rating Sensitivities are further described in the presale report titled 'Mississippi, Higher Education Assistance Corp., Series 2014-1', dated July 16, 2014 available on www.fitchratings.com, or by clicking on the link.

A comparison of the transaction's Representations, Warranties & Enforcement Mechanisms (RW&Es) to those of typical RW&Es for that asset class is available by accessing the appendix that accompanies the initial Presale Report. Please refer to 'Mississippi Higher Education Assistance Corp, Series 2014-1 -- Appendix', published on July 16, 2014 at www.fitchratings.com.

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

Applicable Criteria and Related Research:

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

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

Applicable Criteria and Related Research: Mississippi Higher Education Assistance Corp., Series 2014-1 -- (US ABS)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=752555

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=840258

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Primary Analyst
Charlene M. Davis, +1 212-908-0213
Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Harry Kohl, +1 212-908-0866
Associate Director
or
Committee Chairperson
Tracy Wan, +1 212-908-9171
Senior Director
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com