Fitch Ratings has removed from Rating Watch Negative and affirmed the Massachusetts Educational Financing Authority's (MEFA) Amended and Restated 2001 General Bond Resolution Educational Loan Revenue Bonds, Issue E. The Rating Outlook is Negative.
KEY RATING DRIVERSThe affirmation of the notes is based on:
Adequate Collateral Quality: The trust is collateralized by a seasoned pool of mostly fixed rate private student loans with more than 99% of all loans in repayment and less than 0.07% in deferment and forbearance. All existing loans have been credit tested and originated according to the underwriting criteria for the MEFA loan program.
Sufficient Credit Enhancement: Loss coverage multiples were sufficient at Fitch's 'AAsf' rating category. Credit enhancement (CE) is provided by overcollateralization (OC) and excess spread in addition to credit on recoveries for loans that have already defaulted. The current CE is 3.89% and total parity is 104.05%.
Satisfactory Servicing Capabilities: Day-to-day servicing is provided by Xerox. Xerox has been servicing MEFA loans since 2003. Fitch views its servicing capabilities as effective.
The Outlook on the notes is Negative due to current parity decreases, minimal excess spread in the near term and compressed loss coverage multiples.
As of the June 2013 report, approximately $110 million loans were refinanced out of MEFA Issue E and used to back part of MEFA's Issue K, series 2013 trust. MEFA Issue E currently has outstanding loan balance of approximately $278 million with a total parity of 104.05%. The current collateral is comprised more than 99% private student loans and approximately 0.02% FFELP student loans, of which 72% are fixed rate loans and 28% variable rate loans. The pool has a weighted average seasoning of five years for loans in repayment. Based on performance information provided by the issuer, Fitch projects lifetime default of 8%-10%, which equates to remaining defaults of 5%-7% of the current balance. The recovery is estimated to be 34-36%.
In addition to the credit enhancement provided by overcollateralization and excess spread, Fitch gave credit to projected recoveries from prior defaults that occurred between March 31, 2010 to June 30, 2013 and are pledged to the trust. The prior defaults stood at $32.9 million as of June 30, 2013, and Fitch estimates additional $8 million recovery to be received by the trust over the next 10 years.
Although the notes are insured by AMBAC Assurance Corp. (Ambac), Fitch does not give credit to the insurance, as Fitch does not provide a rating for Ambac. The rating on the bonds is therefore based upon the underlying collateral performance. After funds have been disbursed to satisfy the requirements under the flow of funds as stated in the General Resolution, the trust may release cash to the issuer if parity is greater than 103% and Ambac has approved of such a cash release. Fitch assumes Ambac will not provide such an approval and credit is given to the OC above 103% level.
RATING SENSITIVITIESAs Fitch's base case default proxy is derived primarily from historical collateral performance, actual performance may differ from the expected performance, resulting in higher loss levels than the base case. This will result in a decline in credit enhancement and remaining loss coverage levels available to the notes and may make certain note ratings susceptible to potential negative rating actions, depending on the extent of the decline in coverage.
Fitch affirms and assigns Outlooks to the following Massachusetts Educational Financing Authority Amended and Restated 2001 General Bond Resolution Educational Loan Revenue Bonds, Issue E:
--Series 2001A 'AAsf'; Outlook Negative;
--Series 2002A 'AAsf'; Outlook Negative;--Series 2002E 'AAsf'; Outlook Negative;
--Series 2003A 'AAsf'; Outlook Negative;--Series 2003E 'AAsf'; Outlook Negative;
--Series 2004A 'AAsf'; Outlook Negative;--Series 2004B 'AAsf'; Outlook Negative;
--Series 2005A 'AAsf'; Outlook Negative;--Series 2005B 'AAsf'; Outlook Negative;
--Series 2006A-1 'AAsf'; Outlook Negative;--Series 2006A-2 'AAsf'; Outlook Negative;--Series 2006C 'AAsf'; Outlook Negative;--Series 2006D 'AAsf'; Outlook Negative;
--Series 2007A-1 'AAsf'; Outlook Negative;--Series 2007A-2 'AAsf'; Outlook Negative;--Series 2007A-3 'AAsf'; Outlook Negative;--Series 2007B 'AAsf'; Outlook Negative;--Series 2007C 'AAsf'; Outlook Negative;--Series 2007D 'AAsf'; Outlook Negative;--Series 2007E 'AAsf'; Outlook Negative.
Additional information is available at www.fitchratings.com.
Applicable Criteria and Related Research:--'Global Structured Finance Rating Criteria,' May 24, 2013;--'U.S. Private Student Loan ABS Criteria,' Jan. 29, 2013.
Applicable Criteria and Related Research:Global Structured Finance Rating Criteriahttp://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708661U.S. Private Student Loan ABS Criteriahttp://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=698293
Additional DisclosureSolicitation Statushttp://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=806256ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.
Fitch RatingsPrimary Analyst:Autumn Mascio, +1-212-908-0896DirectorFitch Ratings, Inc.One State Street PlazaNew York, NY 10004orCommittee Chairperson:Tracy Wan, +1-212-908-9171Senior DirectororMedia Relations:Sendhil Selvaraj, +44 (0) 207 682 7218sendhil.selvaraj@fitchratings.com
No comments:
Post a Comment