Fitch Affirms Panhandle-Plains Higher Ed Auth, Inc. Ser 2011-1 Indenture of Trust
KEY RATING DRIVERS
High Collateral Quality: The trust collateral is composed of 100% of Federal Family Education Loan Program (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.
Sufficient Credit Enhancement (CE): CE is provided by overcollateralization and excess spread. As of the November 2014 distribution date, senior/total parity is 112.77%. Excess cash cannot be released from the trust until all the notes are paid-in-full.
Adequate Liquidity Support: Liquidity support is provided by a reserve account where the balance is determined as the greater of 0.25% of the outstanding notes and \\$724,800.
Acceptable Servicing Capabilities: Xerox Education Services LLC. (Xerox-ES), as the servicer, is responsible for the day-to-day servicing of this trust. In Fitch's opinion, Xerox-ES is an acceptable servicer of FFELP 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.
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.
Fitch has affirmed the following ratings:
Panhandle-Plains Higher Education Authority Inc. Series 2011-1 Indenture of Trust
--Class A-2 at 'AAAsf'; Outlook Stable;
--Class A-3 at 'AAAsf'; Outlook Stable.