Fitch Ratings has affirmed all the outstanding bonds for Vermont Student Assistance Corp. - 1995 Bond Resolution. The Rating Outlook is Stable. Fitch used its 'Global Structured Finance Rating Criteria', 'USPrivate Student Loan ABS Criteria' and 'USFFELP Student Loan ABS Criteria' to review the transaction.
KEY RATING DRIVERS
Adequate Collateral Quality: The trust is collateralized by approximately $27.8 million of private student loans and $38.4 million FFELP student loans. The FFELP student loans have 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.
For the private student loan, Fitch projects the remaining default to be in the range of 20% to 23% as a percentage of the current pool balance. The recovery is estimated to be 10% based on information provided by the issuer.
Adequate Credit Enhancement (CE): CE is provided by overcollateralization (OC) and excess spread. Although the total parity is currently at 111.08%, Fitch only gives credit to the CE up to the 103% cash release level given additional cash may be released from the trust. At the release parity level, the CE is sufficient to maintain its current rating of 'B-sf'.
Satisfactory Servicing Capabilities: Day-to-day servicing is provided by Vermont Student Assistance Corp. (VSAC). Fitch believes the servicing operations are acceptable at this time.
RATING SENSITIVITIES
For private student loan ABS, 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 CE and remaining loss coverage levels available to the bonds and may make certain bond ratings susceptible to potential negative rating actions, depending on the extent of the decline in coverage.
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.
Fitch affirms the following ratings:
Vermont Student Assistance Corp. - 1995 Resolution Bonds
-- Class 1998L at 'B-sf'; Outlook Stable;
-- Class 2001X at 'B-sf'; Outlook Stable;
-- Class 2001Y at 'B-sf'; Outlook Stable;
-- Class 2001AA at 'B-sf'; Outlook Stable;
-- Class 2002DD at 'B-sf'; Outlook Stable;
-- Class 2003KK at 'B-sf'; Outlook Stable;
-- Class 2004OO at 'B-sf'; Outlook Stable;
-- Class 2004PP at 'B-sf'; Outlook Stable;
-- Class 2005RR at 'B-sf'; Outlook Stable;
-- Class 2005SS at 'B-sf'; Outlook Stable;
--Class 2007WW at 'B-sf'; Outlook Stable;
--Class 2007XX at 'B-sf'; Outlook Stable;
-- Class 2007YY at 'B-sf'; Outlook Stable.
Source: Fitch 11.10.2014www.fitchratings.com