NEW YORK--(BUSINESS WIRE)--Fitch Ratings rates Mississippi Higher Education Corporation series 2014 as follows:
--$387,000,000 Series 2014 A-1 notes 'AAAsf'; Outlook Stable.
KEY RATING DRIVERS
High Collateral Quality: The trust collateral consists of 100% 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).
Fitch currently rates the U.S. at 'AAA' with a Stable Outlook.
Sufficient Credit Enhancement: The cash flow results for the class A notes were satisfactory under Fitch 'AAAsf' stresses. At closing, total parity is expected to be approximately 101.42%, and senior parity is expected to be 104.04%. Total credit enhancement (CE) at closing is provided by overcollateralization of $5,634,061, excess spread and, in the case of the class A notes, approximately 2.52% subordination provided by the class B notes. The class B notes will not be rated.
Adequate Liquidity Support: Liquidity support is initially provided by a $992,500 reserve account (0.25% of outstanding note balance) and a Capitalized Interest Fund Account at $6,523,513, funded at closing with note proceeds. The reserve fund requirement is 0.25% of the outstanding note balance with a floor of $600,000.
Acceptable Servicing Capabilities: ACS Loan Services LLC will be responsible for servicing 100% of the MHEAC 2014 portfolio. Nelnet Servicing, LLC will serve as the back-up servicer. In Fitch's opinion, both entities 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 CE 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 presale report titled 'Mississippi, Higher Education Assistance Corp., Series 2014-1', dated July 16, 2014 available on www.fitchratings.com.
A comparison of the transaction's Representations, Warranties & Enforcement Mechanisms (RW&Es) to those of typical RW&Es for that asset class is available by accessing the appendix that accompanies the initial Presale Report. Please refer to 'Mississippi Higher Education Assistance Corp, Series 2014-1 -- Appendix ', published on July 16, 2014 at www.fitchratings.com.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (May 2014);
--'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria' (June 2014).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748821
Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=750530
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=842387
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