NEW YORK--(BUSINESS WIRE)--Fitch Ratings affirms the ratings of the senior notes issued by KeyCorp Student Loan Trust 2004-A (Group I) at 'AAAsf' and upgrades the ratings of the subordinate notes to 'Asf' from 'A-sf'. The Rating Outlook remains Stable for all notes.
KEY RATING DRIVERS
--High Collateral Quality: The collateral for the Group I notes are comprised of 100% of Federal Family Education Loan Program (FFELP) loans. The credit quality of the trust collateral is high, in Fitch's opinion, based on the guarantees provided by the transaction's eligible guarantors and at least 97% reinsurance of principal and accrued interest provided by the U.S. Department of Education (ED). On March 24, 2014, Fitch affirmed the U.S. sovereign rating at 'AAA' and assigned a Stable Outlook.
--Sufficient Credit Enhancement: Credit enhancement (CE) is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance), excess spread, and for the class A notes, subordination provided by the class B notes. As of December 2013, total and senior parity (excluding the reserve account) is 100.00% (the release level) and 105.43% respectively. Including the reserve, total parity is 100.38% and senior parity is 105.83%. The parity ratios are expected to stay at the release level as the step-down date has passed, and cash release is expected to continue.
--Adequate Liquidity Support: Liquidity support is provided by a Debt Service Reserve Fund currently sized at $549,105.
--Acceptable Servicing Capabilities: KeyBank National Association is the Master Servicer for the transaction, with Pennsylvania Higher Education Assistance Agency and Great Lakes Educational Loan Services, Inc. acting as subservicers. Fitch believes all services are acceptable servicers of FFELP student loans.
RATING SENSITIVITIES
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.
Fitch has taken the following rating actions:
KeyCorp Student Loan Trust 2004-A (Group I):
--Class A-2 affirmed at 'AAAsf'; Outlook Stable;
--Class B upgraded to 'Asf' from 'A-sf'; Outlook Stable.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (May 24, 2013);
--'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria' (May 17, 2013).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708661
Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria -- Amended
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708795
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=827006
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