Fitch Affirms Academic Loan Funding Trust 2013-1 Senior Notes
OREANDA-NEWS. Fitch Ratings has affirmed the Academic Loan Funding Trust 2013-1 senior notes at 'AAAsf'. The Rating Outlook remains Stable.
KEY RATING DRIVERS
High Collateral Quality: The trust collateral consists of 100% rehabilitated 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's current U.S. sovereign rating is 'AAA' with a Stable Outlook.
Sufficient Credit Enhancement: Credit enhancement (CE) is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance) and excess spread. As of September 2015, total parity is maintaining 104.00%, the cash release level.
Adequate Liquidity Support: Liquidity support is provided by a $564,692 reserve account. The reserve account has a floor of $250,000.
Acceptable Servicing Capabilities: Day-to-day servicing is provided by Pennsylvania Higher Education Assistance Agency (PHEAA) and Great Lakes Educational Loan Services, Inc. (GLELSI). All servicers are acceptable servicers of FFELP.
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 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 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.
Fitch has affirmed the following rating:
Academic Loan Funding Trust 2013-1:
--Class A at 'AAAsf'; Outlook Stable.