Fitch Affirms Oklahoma Student Loan Authority, Series 2013-1 Notes
KEY RATING DRIVERS
High Collateral Quality: The trust collateral consists 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 reinsurance provided by the U.S. Department of Education (ED) for at least 97% of principal and accrued interest. Fitch currently rates the U.S. 'AAA' with a Stable Outlook.
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 December 2014, parity was at 105.64%. Additionally, the trust is in turbo and no cash will be released until all notes have been paid in full.
Adequate Liquidity Support: Liquidity support for the notes is provided by a reserve account currently at 0.25% of the bond balance.
Acceptable Servicing Capabilities: OSLA is responsible for day-to-day servicing of the trust as Nelnet Servicing LLC provides backup servicing. Fitch believes both are acceptable servicers of FFELP student loans
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 affirmed the following ratings:
Oklahoma Student Loan Authority, Series 2013-1:
--Series 2013-1 at AAAsf; Outlook Stable.