Fitch to Rate South Carolina Student Loan Corporation 2015-A Series; Presale Issued
--\\$198,400,000 class A-1 notes 'Asf(exp)'; Outlook Stable.
KEY RATING DRIVERS
High Collateral Quality: The trust collateral consists of approximately \\$250.37 million of private student loans and Federal Family Education Program (FFELP) Loans. As of Sept. 30, 2015, the statistical cut-off date, the trust included 81.42% of private student loans which possess a weighted average Fair Isaac Corp. (FICO) score of 739. The remainder of the trust collateral includes 18.58% of FFELP loans, including approximately 11.77% of rehab 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. Fitch currently rates the U.S. at 'AAA'/Stable.
Sufficient Credit Enhancement: Cash flow scenarios for the Series 2015-A class A notes were satisfactory under Fitch's 'Asf' stresses. Credit enhancement (CE) is provided by overcollateralization (OC), excess spread. At closing, the initial parity will be approximately 126.51%. The trust will be in turbo from closing date, and cash cannot be released until all of the bonds have been paid in full.
Adequate Liquidity Support: Liquidity support is provided by a reserve account sized \\$625,917, which is funded at closing. The reserve account requirement is equal to the greater of 0.25% of the outstanding student loan balance and 0.15% of the initial student loan balance.
Acceptable Servicing Capabilities: The South Carolina Student Loan Corporation (SCSLC) will service 100% of the trust's student loan pool and Nelnet Servicing LLC will be backup servicer. In Fitch's opinion, The SCSLC and Nelnet Servicing LLC are acceptable servicers of FFELP and private student loans.
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. Fitch has reviewed this transaction under both the existing and proposed criteria and found no differences in the expected ratings.
Since FFELP student loan ABS rely on the U.S. government to reimburse defaults, 'Asf' 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.
Key Rating Drivers and Rating Sensitivities are further described in the pre-sale report titled 'South Carolina Student Loan Corporation, 2015-A Series', and for a further discussion on the representations, warranties, and enforcement mechanisms available to investors in this transaction, please see the related presale appendix, dated November 19, 2015, available on www.fitchratings.com, or by clicking on the link.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action