Fitch Affirms Indiana Secondary Market Loans, Inc., Series 2014; Outlook Stable
OREANDA-NEWS. Fitch Ratings has affirmed the senior notes issued by Indiana Secondary Market for Education Loans Series 2014 at 'AAAsf'. The Rating Outlook remains Stable.
KEY RATING DRIVERS
High Collateral Quality: The trust collateral consists of 100% Federal Family Education Loan Program (FFELP) loans, of which 21% are rehabilitated 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. 'AAA' with a Stable Outlook.
Sufficient Credit Enhancement: Credit enhancement (CE) is provided by overcollateralization and excess spread. Total parity ratio is 104.11%, as of the October 2015 distribution.
Excess cash cannot be released until the notes are paid in full.
Adequate Liquidity Support: Liquidity support is provided by a capitalized interest fund sized at $1.54 million and a debt service reserve fund sized at the greater of 0.50% of the current pool balance and $250,000. The initial deposits for these accounts were funded at closing with note proceeds. The current debt service reserve capital interest account balances are $1.54 million and $682,461, respectively. On the December 2015 distribution date, any funds remaining in the capitalized interest will be transferred to the collection fund as part of the flow of funds.
Acceptable Servicing Capabilities: The 2014 portfolio will be serviced by American Education Services, a servicing division of the Pennsylvania Higher Education Assistance Agency; Xerox Education Services, LLC; and Great Lakes Educational Loan Services. All servicers 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.
DUE DILIGENCE USAGE
No third-party due diligence was provided or reviewed in relation to this rating action.
Fitch has taken the following rating actions:
Indiana Secondary Market for Education Loans Inc., Series 2014:
--Class A affirmed at 'AAAsf'; Outlook Stable