NEW YORK--(BUSINESS WIRE)--Fitch Ratings assigns ratings to New Mexico Educational Assistance Foundation, Series 2013-1, out of the New Mexico Educational Assistance Foundation - 1998 Trust Indenture, as follows:
--$224,200,000 Senior Series 2013-1 A-1 Bonds 'AAAsf'; Outlook Negative.
In addition, the remaining bonds in the New Mexico Educational Assistance Foundation 1998 Trust Indenture are Confirmed by Fitch, and the short term rating for the Series 2001, 2002, 2003, and 2004 notes are Withdrawn, due to the removal of the LOC, which provided direct liquidity support to the bonds.
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 subaccount 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 SENSITIVITY
Since FFELP student loan ABS rely 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 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.
Key Rating Drivers and Rating Sensitivities are further described in the accompanying pre-sale report titled 'New Mexico Educational Assistance Foundation, Series 2013-1' dated April 26, 2013.
Fitch Confirms the following ratings:
New Mexico Educational Assistance Foundation - 1998 Trust Indenture:
Series 2001A-1 at 'AAAsf', Outlook Negative;
Series 2002A-2 at 'AAAsf', Outlook Negative;
Series 2003A-2 at 'AAAsf', Outlook Negative;
Series 2004A-1 at 'AAAsf', Outlook Negative;
Series 2007A-1 at 'AAAsf', Outlook Negative;
Series 2007A-2 at 'AAAsf', Outlook Negative;
Series 2009B-2015 at 'AAAsf', Outlook Negative;
Series 2009B-2016 at 'AAAsf', Outlook Negative;
Series 2009B-2017 at 'AAAsf', Outlook Negative;
Series 2009B-2018 at 'AAAsf', Outlook Negative;
Series 2009B-2019 at 'AAAsf', Outlook Negative;
Series 2009B-2020 at 'AAAsf', Outlook Negative;
Series 2009C-2014 at 'AAAsf', Outlook Negative;
Series 2009C-2015 at 'AAAsf', Outlook Negative.
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 1, 2013).
Applicable Criteria and Related Research
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=790727
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