NEW YORK--(BUSINESS WIRE)--Fitch Ratings expects to rate the Rhode Island Student Loan Authority 2016 senior series student revenue bonds from the 2009 Trust as follows:
--$1,950,000 2016 (Serial 2017) 'AAsf(EXP)'; Outlook Stable;
--$2,085,000 2016 (Serial 2018) 'AAsf(EXP)'; Outlook Stable;
--$2,145,000 2016 (Serial 2019) 'AAsf(EXP)'; Outlook Stable;
--$2,280,000 2016 (Serial 2020) 'AAsf(EXP)'; Outlook Stable;
--$2,525,000 2016 (Serial 2021) 'AAsf(EXP)'; Outlook Stable;
--$2,815,000 2016 (Serial 2022) 'AAsf(EXP)'; Outlook Stable;
--$3,675,000 2016 (Serial 2023) 'AAsf(EXP)'; Outlook Stable;
--$5,135,000 2016 (Serial 2024) 'AAsf(EXP)'; Outlook Stable;
--$5,225,000 2016 (Serial 2025) 'AAsf(EXP)'; Outlook Stable;
--$5,225,000 2016 (Serial 2026) 'AAsf(EXP)'; Outlook Stable;
--$4,675,000 2016 (Serial 2027) 'AAsf(EXP)'; Outlook Stable;
--$4,475,000 2016 (Serial 2028) 'AAsf(EXP)'; Outlook Stable;
--$2,815,000 2016 (Serial 2029) 'AAsf(EXP)'; Outlook Stable;
--$2,775,000 2016 (Serial 2030) 'AAsf(EXP)'; Outlook Stable;
--$2,800,000 2016 (Serial 2032) 'AAsf(EXP)'; Outlook Stable;
--$4,400,000 2016 (Serial 2034) 'AAsf(EXP)'; Outlook Stable.
Fitch also expects to upgrade the ratings of the existing bonds in the trust indenture dated June 1, 2009 at closing to 'AAsf' from 'Asf' and maintain the Stable Outlook.
KEY RATING DRIVERS
Adequate Collateral Quality: The master trust will be collateralized by existing and new fixed-rate private student loans to be originated from deal closing to Sept. 1, 2017. It is expected that approximately $53 million of student loans will be added to the trust at the end of the acquisition period. All loans have been credit tested, and have been or will be originated under the RISLA Fixed Rate Loan program.
Sufficient Credit Enhancement (CE): Transaction cash flows were satisfactory under all stressed scenarios at Fitch's 'AA' rating category. CE is provided by overcollateralization and excess spread. The parity ratio is expected to be 119.46% at closing. Cash will be released to the issuer when the parity reaches 131%, but only until Dec. 1, 2021.
Adequate Liquidity Support: Liquidity support will be provided by a $7.25 million debt service reserve fund sized at 3% of the outstanding bond balance, with a minimum balance of $2,418,150 (1% of initial bond balance).
Satisfactory Servicing Capabilities: Day-to-day servicing will be provided by RISLA, which has been servicing their own loans. Fitch views RISLA as an acceptable servicer.
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 and/or prepayment speeds than the base case. This will result in a decline in available CE and the remaining loss coverage levels available to the notes. Therefore, note ratings may be susceptible to potential negative rating actions, depending on the extent of the decline in the coverage.
Rating sensitivity results should only be considered as one potential outcome, as the transaction is exposed to multiple dynamic risk factors. Rating sensitivity should not be used as an indicator of future rating performance.
Fitch's stress analysis is discussed in the presale titled 'Rhode Island Student Loan Authority 2016 Senior Series, dated April 8, 2016.
DUE DILIGENCE USAGE
No third-party due diligence was provided or reviewed in relation to this rating action.
Additional information is available at www.fitchratings.com.
Rhode Island Student Loan Authority 2016 Senior Series (US ABS)
Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)
Criteria for Interest Rate Stresses in Structured Finance Transactions and Covered Bonds (pub. 19 Dec 2014)
Global Structured Finance Rating Criteria (pub. 06 Jul 2015)
U.S. Private Student Loan ABS Criteria (pub. 31 Jul 2015)
Dodd-Frank Rating Information Disclosure Form