Fitch Ratings rates Massachusetts Educational Financing
Authority (MEFA) Education Loan Revenue Bonds, Issue I, Series
2015B (federally taxable) as follows:
--$1,700,000, 2015B due 7/1/2017 'Asf'; Outlook Stable;
--$1,600,000, 2015B due 1/1/2018 'Asf'; Outlook Stable;
--$1,600,000, 2015B due 7/1/2018 'Asf'; Outlook Stable;
--$1,700,000, 2015B due 1/1/2019 'Asf'; Outlook Stable;
--$1,700,000, 2015B due 7/1/2019 'Asf'; Outlook Stable;
--$2,000,000, 2015B due 1/1/2020 'Asf'; Outlook Stable;
--$1,600,000, 2015B due 7/1/2020 'Asf'; Outlook Stable;
--$1,500,000, 2015B due 1/1/2021 'Asf'; Outlook Stable;
--$1,500,000, 2015B due 7/1/2021 'Asf'; Outlook Stable;
--$1,500,000, 2015B due 1/1/2022 'Asf'; Outlook Stable;
--$1,800,000, 2015B due 7/1/2022 'Asf'; Outlook Stable;
--$1,800,000, 2015B due 1/1/2023 'Asf'; Outlook Stable;
--$1,600,000, 2015B due 7/1/2023 'Asf'; Outlook Stable;
--$6,300,000, 2015B due 7/1/2025 'Asf'; Outlook Stable;
--$15,900,000, 2015B due 1/1/2030 'Asf'; Outlook Stable;
--$6,000,000, 2015B due 1/1/2031 'Asf'; Outlook Stable;
--$15,000,000, 2015B due 1/1/2032 (Floating Rate) 'Asf';
Outlook Stable;
--$11,200,000, 2015B due 1/1/2032 'Asf'; Outlook Stable.
Fitch also confirms and affirms the ratings of the existing
bonds in the Issue I trust.
KEY RATING DRIVERS
Adequate Collateral Quality: The master trust will be
collateralized by approximately $555.4 million of existing
fixed-rate private student loans originated with proceeds from
certain earlier bond issuances and approximately $275 million of
new fixed and variable rate private student loans to be originated
from deal closing based on a loan origination schedule that will
end Sept. 30, 2016. All existing loans have been credit tested, and
new fixed and variable-rate private student loans will be
originated according to the underwriting criteria for the MEFA loan
program.
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 9.50%. The initial parity
ratio is expected to be 110.50% and cash can be released when
parity exceeds 109.0%. Liquidity support is provided by a $10.5
million capitalized interest fund and a debt service reserve fund
sized at 1.01% of the bond balance.
Acceptable Servicing Capabilities: Day-to-day servicing will be
provided by Xerox Education Services (XEROX), 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.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in
relation to this rating action.
Fitch affirms the following:
Massachusetts Educational Financing Authority Issue I (Series
2009, 2010A, 2010B, 2014 and 2015A):
Series 2009:
--Series 2009 due 1/1/2016 at 'Asf'; Outlook Stable;
--Series 2009 5.25% due 1/1/2016 at 'Asf'; Outlook Stable;
--Series 2009 due 1/1/2017 at 'Asf'; Outlook Stable;
--Series 2009 due 1/1/2018 at 'Asf'; Outlook Stable;
--Series 2009 5.5% due 1/1/2018 at 'Asf'; Outlook Stable;
--Series 2009 due 1/1/2019 at 'Asf'; Outlook Stable;
--Series 2009 5.5% 1/1/2019 at 'Asf'; Outlook Stable;
--Series 2009 due 1/1/2020 at 'Asf'; Outlook Stable;
--Series 2009 5.75% due 1/1/2020 at 'Asf'; Outlook Stable;
--Series 2009 5.75% term bonds due 1/1/2023 at 'Asf'; Outlook
Stable;
--Series 2009 6.00% term bonds due 1/1/2028 at 'Asf'; Outlook
Stable.
Series 2010:
--2010 Series A due 1/1/2016 at 'Asf'; Outlook Stable;
--2010 Series A due 1/1/2017 at 'Asf'; Outlook Stable;
--2010 Series A due 1/1/2018 at 'Asf'; Outlook Stable;
--2010 Series A due 1/1/2019 at 'Asf'; Outlook Stable;
--2010 Series A due 1/1/2020 at 'Asf'; Outlook Stable;
--2010 Series A due 1/1/2021 at 'Asf'; Outlook Stable;
--2010 Series A due 1/1/2022 at 'Asf'; Outlook Stable;
--2010 Series A due 1/1/2025 at 'Asf'; Outlook Stable;
--2010 Series A due 1/1/2026 at 'Asf'; Outlook Stable;
--2010 Series A due 1/1/2027 at 'Asf'; Outlook Stable;
--2010 Series A due 1/1/2028 at 'Asf'; Outlook Stable;
--2010 Series A due 1/1/2029 at 'Asf'; Outlook Stable;
--2010 Series A due 1/1/2030 at 'Asf'; Outlook Stable.
--2010 Series B due 1/1/2016 at 'Asf'; Outlook Stable;
--2010 Series B due 1/1/2017 at 'Asf'; Outlook Stable;
--2010 Series B due 1/1/2018 at 'Asf'; Outlook Stable;
--2010 Series B due 1/1/2019 at 'Asf'; Outlook Stable;
--2010 Series B due 1/1/2020 at 'Asf'; Outlook Stable;
--Series 2010 Term bond due 1/1/2023 at 'Asf'; Outlook
Stable;
--Series 2010 Term bond due 1/1/2031 at 'Asf'; Outlook
Stable.
Series 2014:
--Series 2014 due 1/1/2017 at 'Asf'; Outlook Stable;
--Series 2014 due 1/1/2018 at 'Asf'; Outlook Stable;
--Series 2014 due 1/1/2019 at 'Asf'; Outlook Stable;
--Series 2014 5% due 1/1/2019 at 'Asf'; Outlook Stable;
--Series 2014 due 1/1/2020 at 'Asf'; Outlook Stable;
--Series 2014 due 1/1/2021 at 'Asf'; Outlook Stable;
--Series 2014 5% due 1/1/2021 at 'Asf'; Outlook Stable;
--Series 2014 due 1/1/2022 at 'Asf'; Outlook Stable;
--Series 2014 due 1/1/2023 at 'Asf'; Outlook Stable;
--Series 2014 5% due 1/1/2023 at 'Asf'; Outlook Stable;
--Series 2014 due 1/1/2024 at 'Asf'; Outlook Stable;
--Series 2014 due 1/1/2025 at 'Asf'; Outlook Stable;
--Series 2014 due 1/1/2026 at 'Asf'; Outlook Stable;
--Series 2014 due 1/1/2027 'Asf'; Outlook Stable;
--Series 2014 5% due 1/1/2027 at 'Asf'; Outlook Stable;
--Series 2014 due 1/1/2032 at 'Asf'; Outlook Stable.
Series 2015A:
--2015A due 1/1/2017 5.0% at 'Asf'; Outlook Stable;
--2015A due 1/1/2018 5.0% at 'Asf'; Outlook Stable;
--2015A due 1/1/2019 3.5% at 'Asf'; Outlook Stable;
--2015A due 1/1/2019 5.0% at 'Asf'; Outlook Stable;
--2015A due 1/1/2020 5.0% at 'Asf'; Outlook Stable;
--2015A due 1/1/2021 5.0% at 'Asf'; Outlook Stable;
--2015A due 1/1/2022 3.0% at 'Asf'; Outlook Stable;
--2015A due 1/1/2022 5.0% at 'Asf'; Outlook Stable;
--2015A due 1/1/2023 5.0% at 'Asf'; Outlook Stable;
--2015A due 1/1/2024 5.0% at 'Asf'; Outlook Stable;
--2015A due 1/1/2025 5.0% at 'Asf'; Outlook Stable;
--2015A due 1/1/2026 5.0% at 'Asf'; Outlook Stable;
--2015A due 1/1/2027 4.0% at 'Asf'; Outlook Stable;
--2015A due 1/1/2028 4.0% at 'Asf';Outlook Stable;
--2015A due 1/1/2029 4.125% at 'Asf'; Outlook Stable;
--2015A due 1/1/2030 4.25% at 'Asf'; Outlook Stable;
--2015A due 1/1/2031 4.25% at 'Asf'; Outlook Stable;
--2015A due 1/1/2032 4.25% at '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
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
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
2014 -- Appendix
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=747444
Massachusetts Educational Financing Authority, Issue I, Series
2015A -- Appendix
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=865763
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=995579
Solicitation Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=995579
Endorsement Policy
https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31
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Fitch RatingsPrimary AnalystNicole EdwardsDirectorPhone
+1-212-9089114Fitch Ratings, Inc.33 Whitehall StreetNew York, NY
10004orSecondary AnalystEmily LeeDirector1-212-908-0667orCommittee
ChairpersonKevin CorriganSenior Director1-212-908-9156orMedia
RelationsSandro Scenga, +1
212-908-0278sandro.scenga@fitchratings.com