OREANDA-NEWS. Fitch Ratings has affirmed the Rhode Island Student Loan Authority Series 2012-2 class 2012-2 note at 'AAAsf'. The Rating Outlook remains Stable

KEY RATING DRIVERS

U. S. Sovereign Risk: The trust collateral is comprised of 100% Federal Family Education Loan Program (FFELP) 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. The U. S. sovereign rating is currently 'AAA'/Stable Outlook.

Collateral Performance: Fitch assumes a base case default rate of 16.75% and a 50.25% default rate under the 'AAA' credit stress scenario. The claim reject rate is assumed to be 0.25% for the base case and 2.0% for the 'AAAsf' case. Fitch applies the standard default timing curve in its credit stress cash flow analysis. The trailing-twelve-month average constant default rate, utilized in the maturity stresses, is 5.35%. Trailing-twelve-month levels of deferment, forbearance, and constant prepayment rate (voluntary and involuntary) are 7.98%, 7.54%, and 17.9%, respectively, which are used as the starting point in cash flow modeling. In addition, since IBR data was not provided by the issuer, IBR (before adjustment) was assumed to be 5% - 35%. Subsequent declines or increases are modeled as per criteria. The weighted average borrower benefit is assumed to be approximately 0.72% based on information provided by the issuer.

Basis and Interest Rate Risk: Fitch applies its standard basis and interest rate stresses to this transaction as per criteria.

Payment Structure: Credit enhancement is provided by overcollateralization and excess spread. As of June 2016, parity was 107.2% (6.72% CE). Liquidity support is provided by a reserve account sized at the greater of 0.25% of the outstanding class A note principal balance, and $390,000. Excess cash cannot be released until the note is paid-in-full

Maturity Risk: Fitch's SLABS cash flow model indicates that the notes are paid in full on or prior to the legal final maturity dates under the commensurate rating scenario.

Operational Capabilities: Day-to-day servicing is provided by Nelnet Servicing, LLC. Fitch considers Nelnet to be an acceptable servicer of FFELP loans.

CRITERIA VARIATIONS

For transactions in surveillance, Fitch will treat certain assets such as claims filed as short-term assets in its cash flow analysis. Given that Fitch's current criteria is silent on the treatment of such assets, this treatment is considered a criteria variation. Fitch does not believe such variation has a measurable impact upon the ratings assigned.

Fitch assumed a base case default rate for the credit stresses based on actual trust performance, which is higher than the output from its Default Model. There is no rating impact from such variation.

RATING SENSITIVITIES

Since the FFELP student loan ABS relies 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, basis risk, and loan extension risk account for the majority of the risk embedded in FFELP student loan transactions. Additional defaults, basis shock beyond Fitch's published stresses, lower than expected payment speed, and other factors could result in future downgrades. Likewise, a build-up of CE driven by positive excess spread given favorable basis factor conditions could lead to future upgrades.

USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10

No third-party due diligence was provided or reviewed in relation to this rating action.

Fitch affirms the following ratings:

Rhode Island Student Loan Authority Series 2012-2:

--Class 2012-2 at 'AAAsf'; Outlook Stable.