Fitch Ratings has affirmed the senior student loan notes at 'AAAsf' and the subordinate student loan notes at 'Asf' issued by Vermont Student Assistance Corp Series 2013-1. The Rating Outlook for the notes, which is tied to the sovereign rating of the US government, is Stable.
KEY RATING DRIVERS
High Collateral Quality: The trust collateral is comprised of 100% of 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 at least 97% reinsurance of principal and accrued interest provided by the U.S. Department of Education (ED). Fitch affirmed at 'AAA' and assigned a Stable Outlook to the U.S. sovereign rating on March 24, 2014.
Sufficient Credit Enhancement: CE is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance) and excess spread. As of the April 2014 servicer report, senior and total parity was 103.80% and 101.60%, respectively.
Adequate Liquidity Support: Liquidity support is provided by reserve account sized at 0.25% of outstanding notes with a floor of $560,543.
Acceptable Servicing Capabilities: VSAC will be the servicer and administrator, and Nelnet Servicing LLC (Nelnet) will be the backup servicer for the transaction. Fitch has reviewed the servicing operations of VSAC and Nelnet and believes them to be acceptable servicers of FFELP student loans.
RATING SENSITIVITIES
Since FFELP student loan ABS rely on the U.S. government to reimburse defaults, 'AAA'sf 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.
Fitch affirms the following:
Vermont Student Assistance Corp Series 2013-1:
--Class A at 'AAAsf'; Outlook Stable;
--Class B at 'Asf'; Outlook Stable.
Additional information is available at 'www.fitchratings.com'
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (May 20, 2014);
--'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria' (May 17, 2014).
--'Vermont Student Assistance Corporation, Student Loan Asset-Backed Notes, Series 2013-1 (US ABS)' (June 10, 2013).
A comparison of the transaction's RW&Es to those of typical RW&Es for student loans is available by accessing the reports and links below:
--'Vermont Student Assistance Corporation, Student Loan Asset-Backed Notes, Series 2013-1 -- Appendix'(June 10, 2013);
--'Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions -- Amended'(April 17, 2012).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748821
Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708795
Vermont Student Assistance Corporation, Student Loan Asset-Backed Notes, Series 2013-1 (US ABS)
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=710472
Vermont Student Assistance Corporation, Student Loan Asset-Backed Notes, Series 2013-1 -- Appendix
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=710611
Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=676496
Source: NEW YORK--(BUSINESS WIRE)--Fitch 5.21.2014