NEW YORK--(BUSINESS WIRE)--Fitch Ratings expects to rate the South Carolina Student Loan Corporation (SCSLC) Education Loan Revenue bonds, 2014 series, issued from the South Carolina Student Loan Corp. - 1996 General Resolution, as follows:
--$328,000,000 floating rate class A-1 notes 'AAAsf(exp)'; Outlook Stable;
--$100,000,000 floating rate class A-2 notes 'AAAsf(exp)'; Outlook Stable;
--$73,000,000 floating rate class B notes 'AAsf(exp)'; Outlook Stable.
KEY RATING DRIVERS
High Collateral Quality: The trust collateral is comprised of Federal Family Education Loan Program (FFELP) loans with guaranties provided by 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 Outlook Stable.
Sufficient Credit Enhancement: The cash flow results for the senior and subordinate bonds were satisfactory under Fitch's 'AAA' stresses. At closing, senior and total parities are expected to be 112.00% and 105.46%, respectively. Credit enhancement (CE) is provided by overcollateralization, excess spread, and for the senior bonds, subordination provided by the class B bonds. Excess cash cannot be released from the trust until all the bonds are paid-in-full, with the exception of a one-time cash release to the issuer on or before Sept. 3, 2014, provided the parity test is met.
Adequate Liquidity Support: Liquidity support is provided by a $8,751,230 reserve account which will be funded at closing with the bond proceeds. The required reserve account balance is the greater of (a) 1% of the outstanding balance of the prior bonds and 0.25% of the outstanding balance of the 2014 series bonds, (b) 0.10% of the original principal of all bonds outstanding and (c) $750,000.
Acceptable Servicing Capabilities: Day-to-day servicing will be provided by South Carolina Student Loan Corporation and Nelnet Servicing, LLC will be the back-up servicer. All servicers have demonstrated adequate servicing capabilities.
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.
Key Rating Drivers and Rating Sensitivities are further described in the pre-sale report titled 'South Carolina Student Loan Corporation, 2014 Series', dated August 4, 2014, available on www.fitchratings.com, or by clicking on the link.
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: South Carolina Student Loan Corporation 2014 Series (US ABS)
Global Structured Finance Rating Criteria - Effective from 20 May 2014 to 4 August 2014
Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria