NEW YORK--(BUSINESS WIRE)--Fitch Ratings affirms the rating on the senior note and downgrades the subordinate and Jr. Subordinate notes for PARTS Student Loan Trust 2007-CT1. The Outlook remains Negative for the all the notes. Fitch used its 'Global SF Criteria' and 'U.S. Private SL ABS Criteria' to review the transaction. The rating actions are detailed at the end of this press release.
The affirmation on the senior note is based on a loss coverage multiple commensurate with the rating at 'AAA'. The downgrades on the subordinate and Jr. Subordinate notes are due to an increase in the level of defaults to 12.87% which contributed to a decrease in the loss coverage multiples. In addition, total parity has decreased substantially from the previous quarter (January 2011) to the current (April 2011), from 99.84% to 91.93%. Private Student Loan Trust is based on collateral performance data as of April 2011.
Loss coverage multiples were determined by comparing the projected net loss amount to available credit enhancement. Fitch used historical vintage loss data provided by Access Group, Inc. to form a loss timing curve representative of the collateral pool. After giving seasoning credit for those loans in repayment, Fitch applied the current cumulative gross loss level to the loss timing curve to derive the expected gross losses over the remaining life. A recovery rate of 30% was applied, which was determined to be appropriate based on the recovery assumptions at closing. The Negative Outlooks are assigned to all ratings consistent with Fitch's negative view of the private student loan sector in general.
Credit enhancement consists of excess spread and overcollateralization. Furthermore, senior notes benefit from additional credit enhancement provided by the subordinate note. Fitch assumed excess spread to be the lesser of the current annualized excess spread; the average historical excess spread; and the most recent 12-month average excess spread. That same rate was applied over the remaining life.
The collateral securing the notes are private loans originated according to either TERI or LEARN underwriting guidelines. PHEAA services the loan portfolio.
Fitch has taken the following rating actions:
PARTS Student Loan Trust 2007-CT1
--Class A affirmed at 'AAAsf', Outlook Negative;
--Class B downgraded to 'BBB-sf' from 'A-sf', Outlook Negative;
--Class C downgraded to 'CCsf' from 'BB-sf', Outlook Negative.
Additional information is available at www.fitchratings.com'
Applicable criteria and Related Research:
--'Global Structured Finance Rating Criteria' dated Aug. 13, 2010;
--'U.S. Private Student Loan ABS Criteria' dated Aug. 24, 2009.
Applicable Criteria and Related Research:
U.S. Private Student Loan ABS Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=463174
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