Fitch Affirms KeyCorp Student Loan Trust 1999-B Certificate
-- Certificate class at 'A+sf'; Outlook Positive.
KEY RATING DRIVERS
High Collateral Quality: The collateral consists of approximately 53% private student loans, and 47% Federal Family Education Loan Program (FFELP) loans as of January 2016. The credit quality of the FFELP collateral is high, in Fitch's opinion, based on the guarantees provided by the transaction's eligible guarantors and reinsurance provided by the U.S. Department of Education (ED) for at least 97% of principal and accrued interest. Fitch's current U.S. sovereign rating is 'AAA' with a Stable Outlook. Fitch's remaining default projection is 8%-10% as a percent of the current pool balance, with recoveries at 15%.
Sufficient Credit Enhancement (CE): CE is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance) and excess spread. As of January 2016, total parity was 129.31%. No cash is being released from the trust as all collections are being used to pay down the outstanding certificate.
Acceptable Servicing KeyBank N.A. serves as the Master Servicer for the trust loans, and Fitch believes the servicing operations are acceptable at this time.
On Nov. 18, 2015, Fitch released its exposure draft which delineates revisions it plans to make to the 'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria', dated June 23, 2014.
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.
DUE DILIGENCE USAGE
No third-party due diligence was provided or reviewed in relation to this rating action.