NEW YORK--(BUSINESS WIRE)--Fitch Ratings expects to assign the following ratings to the New Mexico Educational Assistance Foundation, Series 2013-1 student loan asset-backed notes from the New Mexico Educational Assistance Foundation - 1998 Trust Indenture as follows:
--$224,200,000 2013-1 notes 'AAAsf'; Outlook Negative.
KEY RATING DRIVERS
High Collateral Quality: The trust collateral is comprised of Federal Family Education Loan Program (FFELP) loans, including less than 1% rehabilitation loans, with 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.
Negative Rating Outlooks Assigned: Fitch's Rating Outlook for all existing and new issuances of 'AAA' rated tranches of FFELP securitizations remains Negative, which reflects Fitch's Negative Rating Outlook on the long-term foreign and local currency issuer default ratings of the U.S.
Sufficient Credit Enhancement: Cash flow scenarios for the 2013-1 bonds were satisfactory under Fitch's stresses. At closing, total parity is expected to be 110.78%. Total credit enhancement (CE) is provided by overcollateralization (OC) and excess spread.
Adequate Liquidity Support: Liquidity support for the series 2013-1 bonds is provided by a $62,000,000 Supplemental Reserve Fund and a Debt Service Reserve Fund sized at the greater of 1% of the bonds outstanding or $1,000,000, each funded at closing.
Acceptable Servicing Capabilities: Servicing will be provided by NMEAF. Great Lakes Education Loan Services, Inc. (Great Lakes) is the backup servicer. Fitch has reviewed the servicing operations of both NMEAF and Great Lakes, and believes them to be acceptable servicers of FFELP student loans.
RATING SENSITIVITIES
Since FFELP student loan ABS rely on the U.S. government to reimburse defaults, 'AAA'sf 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 buildup of credit enhancement driven by positive excess spread given favorable basis factor conditions could lead to future upgrades. For further discussion of our sensitivity analysis, please see the presale titled 'New Mexico Educational Assistance Foundation, Series 2013-1', dated April 25, 2013.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (June 6, 2012);
--'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria' (April 3, 2012);
--'Representations, Warranties and Enforcement Mechanism in Global Structure Finance Transactions' (April 17, 2012).
Applicable Criteria and Related Research New Mexico Educational Assistance Foundation, Series 2013-1 (US ABS)
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=707385
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679923
Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=704322
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=789720
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