Fitch Expects to Rate Mass Ed Fin Auth Issue I Series 2015B Education Loan Revs
October 09 2015 - 12:12PM
Business Wire
Fitch Ratings expects to rate Massachusetts Educational
Financing Authority (MEFA) education loan revenue bonds, issue I,
series 2015B-1 and 2015B-2 (together series 2015-B) as follows:
--$75,000,000 series 2015B 'Asf (exp)'; Outlook Stable.
KEY RATING DRIVERS
Adequate Collateral Quality: The master trust will be
collateralized by approximately $587.9 million of existing
fixed-rate private student loans originated with proceeds from
earlier bond issuances and $75 million of new MEFA Refinance Loans
(refinance loans) to be originated from deal closing until June 30,
2016. All existing loans have been credit tested, and the refinance
loans will be originated according to the underwriting criteria for
the MEFA loan program (see Appendix A, page 9).
Sufficient Credit Enhancement: Transaction cash flows were
satisfactory under all stressed scenarios of Fitch's 'Asf' rating
category. Credit enhancement (CE) is provided by
overcollateralization (OC) and excess spread. The initial CE for
the notes is expected to be approximately 9.16%. The initial parity
ratio is expected to be approximately 110.08%, and cash can be
released from the trust at 109% parity. Liquidity support is
provided by a capitalized interest account and a debt service
reserve fund sized at 1.0% of the outstanding bond balance with a
minimum of $8 million.
Satisfactory Servicing Capabilities: Day-to-day servicing will
be provided by Xerox Education Services LLC (Xerox-ES), which has
been servicing MEFA loans since 2003. Fitch views its servicing
capabilities as highly effective.
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
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
'Massachusetts Educational Financing Authority, Issue I, Series
2015B', dated Oct. 9, 2015, available by clicking on the link.
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.
Massachusetts Educational Financing Authority, Issue I, Series
2015B (US ABS)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=871721
Applicable Criteria
Global Structured Finance Rating Criteria (pub. 06 Jul 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952
U.S. Private Student Loan ABS Criteria (pub. 31 Jul 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=868836
Related Research
Massachusetts Educational Financing Authority, Issue I, Series
2015B Appendix
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=871737
Additional Disclosures
Dodd-Frank Rating Information Disclosure Form
https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=992070
Solicitation Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=992070
Endorsement Policy
https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31
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Fitch RatingsNicole EdwardsDirector+1-212-908-9114Fitch Ratings,
Inc.33 Whitehall StNew York, NY 10004orSecondary AnalystEmily
LeeAssociate Director+1-212-908-0667orCommittee ChairpersonTracy
WanSenior Director+1-212-908-9171orMedia Relations:Sandro Scenga,
New York, +1 212-908-0278Email: sandro.scenga@fitchratings.com