Fitch Ratings affirms the ratings of the student loan revenue bonds issued by Vermont Student Assistance Corporation (VSAC) 2012A Indenture, series 2012A and 2013A at 'Asf' and maintains the Stable Rating Outlook.Fitch Ratings also affirms the ratings of the student loan revenue bonds issued by VSAC series 2010A-1 at 'A+sf' and maintains the Stable Rating Outlook.
KEY RATING DRIVERS2012A and 2013A
Adequate Collateral Quality: The trust is collateralized by approximately $36.7 million of private student loans as of March 2014. The loans were originated under VSAC's Fixed Rate Private Loan Program. Fitch projected remaining defaults to range between 13%-14% as of the current principal balance based on the trust performing in line with initial default projections. A recovery rate of 15% was applied which was determined to be appropriate based on data provided by the issuer.
Sufficient Credit Enhancement (CE): CE is provided by overcollateralization (the excess of the trust's asset balance over bond balance) and excess spread. The total parity ratio is currently 130.96%. The trust is not releasing any excess cash as the recycling period does not end until June 15, 2014, at which time cash can be released at the release parity threshold of 128%.
Adequate Liquidity Support: Liquidity support is provided by a $683,700 debt service reserve fund and a capitalized interest fund.
Satisfactory Servicing Capabilities: Day-to-day servicing is provided by VSAC. Fitch believes the servicing operations are acceptable at this time.
RATING SENSITIVITIES
As 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 notes and may make certain note ratings susceptible to potential negative rating actions, depending on the extent of the decline in coverage. Fitch will continue to monitor the performance of the trust.
Fitch affirms the following ratings:
Vermont Student Assistance Corporation (VSAC) 2012A Indenture:
VSAC, 2012A Indenture, Series 2012A
--Serial 2017 at 'Asf'; Outlook Stable;
--Serial 2018 at 'Asf'; Outlook Stable;
--Serial 2019 at 'Asf'; Outlook Stable;
--Serial 2019LO at 'Asf'; Outlook Stable;
--Serial 2020LO at 'Asf'; Outlook Stable;
--Serial 2021 at 'Asf'; Outlook Stable;
--Serial 2021LO at 'Asf'; Outlook Stable;
--Serial 2022 at 'Asf'; Outlook Stable;
--Serial 2023 at 'Asf'; Outlook Stable;
--Serial 2024 at 'Asf'; Outlook Stable;
--Serial 2025 at 'Asf'; Outlook Stable;
--Serial 2026 at 'Asf'; Outlook Stable;
--Serial 2029 at 'Asf'; Outlook Stable;
--Serial 2031 at 'Asf'; Outlook Stable;
--Term 2032 at 'Asf'; Outlook Stable.
VSAC, 2012A Indenture, Series 2013A
--Serial 2017 at 'Asf'; Outlook Stable;
--Serial 2018 at 'Asf'; Outlook Stable;
--Serial 2019 at 'Asf'; Outlook Stable;
--Serial 2020 at 'Asf'; Outlook Stable;
--Serial 2021 at 'Asf'; Outlook Stable;
--Serial 2022 at 'Asf'; Outlook Stable;
--Serial 2023 at 'Asf'; Outlook Stable;
--Serial 2024 at 'Asf'; Outlook Stable;
--Serial 2025 at 'Asf'; Outlook Stable;
--Serial 2026 at 'Asf'; Outlook Stable;
--Serial 2027 at 'Asf'; Outlook Stable;
--Serial 2030 at 'Asf'; Outlook Stable.
KEY RATING DRIVERS2010A-1
Adequate Collateral Quality: The trust is collateralized by approximately $18 million of private student loans as of March 2014. The loans were originated under VSAC's Fixed Rate Private Loan Program. Fitch projected remaining defaults to range between 12%-13% as of the current principal balance based on the current trust performance. A recovery rate of 15% was applied which was determined to be appropriate based on data provided by the issuer.
Sufficient Credit Enhancement (CE): CE is provided by overcollateralization (the excess of trust's asset balance over bond balance) and excess spread. The total parity ratio is currently 141.10%. The trust is not releasing any excess cash as the 2030 term bond is still outstanding. After Dec. 15, 2021 and the 2030 term bond is paid in full, cash can be released at the release parity threshold of 140%.
Adequate Liquidity Support: Liquidity support is provided by a $303,700 debt service reserve fund and a capitalized interest fund.
Satisfactory Servicing Capabilities: Day-to-day servicing is provided by VSAC. Fitch believes the servicing operations are acceptable at this time.
RATING SENSITIVITIES
As 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 notes and may make certain note ratings susceptible to potential negative rating actions, depending on the extent of the decline in coverage. Fitch will continue to monitor the performance of the trust.
Fitch affirms the following ratings:
Vermont Student Assistance Corporation, Senior Series 2010A-1:
--Class A-1 (Dec. 15, 2015) at 'A+sf';
--Class A-1 (Dec. 15, 2016) at 'A+sf';
--Class A-1 (Dec. 15, 2017) at 'A+sf;'
--Class A-1 (Dec. 15, 2018) at 'A+sf';
--Class A-1 (Dec. 15, 2019) at 'A+sf';
--Class A-1 (Dec. 15, 2020) at 'A+sf';
--Class A-1 (Dec. 15, 2021) at 'A+sf';
--Class A-1 (Dec. 15, 2022) at 'A+sf';
--Class A-1 (Dec. 15, 2023) at 'A+sf';
--Class A-1 (Dec. 15, 2024) at 'A+sf';
--Class A-1 (Dec. 15, 2030 disc) at 'A+sf';
--Class A-1 (Dec. 15, 2030 par) at 'A+sf'.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'U.S. Private Student Loan ABS Criteria', January 2014;
--'Global Structured Finance Rating Criteria', May 2014.
Applicable Criteria and Related Research:
U.S. Private Student Loan ABS Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=730956
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748821
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'U.S. Private Student Loan ABS Criteria', Jan 2014;
--'Global Structured Finance Rating Criteria', May 2014.
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748821
U.S. Private Student Loan ABS Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=730956
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Source: FitchNEW YORK--(BUSINESS WIRE)--6.13.2014