Fitch Affirms Nelnet Student Loan Trust 2012-5 Trust; Outlook Stable

NEW YORK--()--Fitch Ratings has affirmed senior and subordinate notes issued by Nelnet Student Loan Trust 2012-5 at 'AAAsf' and 'AAsf', respectively. The Rating Outlook remains Stable for both classes.

KEY RATING DRIVERS

High Collateral Quality: The trust collateral consists of 100% (about 84% Non-Rehab; 16% Rehab) 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. The current U.S. sovereign rating is at 'AAA' with a Stable Outlook.

Sufficient Credit Enhancement (CE): While both the senior and subordinate notes will benefit from overcollateralization and future excess spread, the senior notes also benefit from subordination provided by the class B note. As of July 2015, total parity is 101.01% (1% CE) and senior parity is 104.84% (4.62% CE). Cash is being released from the trust given that the targeted trust OC level (greater of 1.00% of the adjusted pool balance and $2 million) is maintained.

Adequate Liquidity Support: Liquidity support is provided by a reserve account. The reserve is sized equal to the greater of 0.60% of the pool balance, and $1,174,000.

Acceptable Servicing Capabilities: Nelnet, Inc. (Nelnet) will service approximately 51% of the portfolio, while Pennsylvania Higher Education Assistance Agency (PHEAA) will service 41% and Edfinancial Services LLC (EFS) will service the remaining 8% of the portfolio. Fitch considers all servicers to be acceptable servicers of FFELP 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 build-up of credit enhancement driven by positive excess spread given favorable basis factor conditions could lead to future upgrades.

DUE DILIGENCE USAGE

No third party due diligence was provided or reviewed in relation to this rating action.

Fitch has affirmed the following ratings:

Nelnet Student Loan Trust 2012-5:

--Class A at 'AAAsf'; Outlook Stable;

--Class B at 'AAsf'; Outlook Stable.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria (pub. 23 Jun 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=750530

Related Research

Nelnet Student Loan Trust 2012-5 Appendix

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=694769

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=991007

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=991007

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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Contacts

Fitch Ratings
Victoria Ohorodnyk
Associate Director
+1-212-908-0866
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Steven Stubbs
Senior Director
+1-212-908-0676
or
Media Relations
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Victoria Ohorodnyk
Associate Director
+1-212-908-0866
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Steven Stubbs
Senior Director
+1-212-908-0676
or
Media Relations
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com