Fitch Affirms Iowa Student Loan Liquidity Corporation, Series 2015-A

NEW YORK--()--Fitch Ratings has affirmed the senior notes at 'Asf' issued by Iowa Student Loan Liquidity Corporation, Series 2015-A. The Rating Outlook remains Stable for all notes.

KEY RATING DRIVERS

Collateral Quality: As of the March 25, 2016 distribution date, the trust is collateralized by approximately $38.82 million of private student loans and $4.55 of FFELP student loans, which are performing in line with initial expectations. Fitch calculated projected lifetime defaults are in the 11% - 15% range. The FFELP loans have 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.

Credit Enhancement: CE is provided by overcollateralization (OC; the excess of the trust's asset balance over the bond balance) and excess spread. The parity ratio (total assets to total liabilities) is 128.36%, as of the March 25, 2016 distribution period. Liquidity support is provided by a reserve account sized at 2% of the bond balance (with a floor of 1% of the initial bond balance) and a $1.24 million capitalized interest account, which will step down based upon a predetermined schedule.

Servicing Capabilities: ISL is the servicer of this portfolio, with Pennsylvania Higher Education Assistance Agency (PHEAA) acting as the backup servicer. Fitch views ISLLC and PHEAA as adequate servicers.

On Nov. 18, 2015, Fitch released its exposure draft which delineates revisions it plans to make to the 'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria,' dated June 23, 2014. Fitch has reviewed the FFELP portion of this transaction under both the existing and proposed criteria.

RATING SENSITIVITIES

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 than the base case. This will result in a decline in credit enhancement and remaining loss coverage levels available to the notes and may make certain note ratings susceptible to potential negative rating actions, depending on the extent of the decline in coverage.

Since the FFELP student loan ABS relies 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, basis risk, and loan extension risk account for the majority of the risk embedded in FFELP student loan transactions. Additional defaults, basis shock beyond Fitch's published stresses, lower than expected payment speed, and other factors 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.

DUE DILIGENCE USAGE

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

Fitch has affirmed the following rating actions:

Iowa Student Loan Liquidity Corporation, Series 2015-A:

--2015-A 2018 'Asf'; Outlook Stable;

--2015-A 2019 'Asf'; Outlook Stable;

--2015-A 2020 'Asf'; Outlook Stable;

--2015-A 2021 'Asf'; Outlook Stable;

--2015-A 2022 'Asf'; Outlook Stable;

--2015-A 2023 'Asf'; Outlook Stable;

--2015-A 2024 'Asf'; Outlook Stable;

--2015-A 2025 'Asf'; Outlook Stable;

--2015-A 2026 'Asf'; Outlook Stable;

--2015-A 2027 'Asf'; Outlook Stable;

--2015-A 2030 'Asf'; Outlook Stable;

--2015-A 2034 'Asf'; Outlook Stable.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158

Criteria for Interest Rate Stresses in Structured Finance Transactions and Covered Bonds (pub. 19 Dec 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=838868

Exposure Draft: Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria (pub. 04 Dec 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=874971

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

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

Rating Criteria for Structured Finance Servicers (pub. 23 Apr 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=864375

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

U.S. Private Student Loan ABS Criteria (pub. 31 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=868836

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1003088

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1003088

Endorsement Policy

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

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Contacts

Fitch Ratings
Primary Analyst
Victoria Ohorodnyk, +1-212-908-0866
Associate Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Kevin Corrigan, +1-212-908-0156
Senior Director
or
Media Relations, New York
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Victoria Ohorodnyk, +1-212-908-0866
Associate Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Kevin Corrigan, +1-212-908-0156
Senior Director
or
Media Relations, New York
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com