Fitch Ratings expects to rate Vermont Student Assistance Corporation, education loan revenue bonds, senior series 2013A (tax-exempt fixed rate bonds) as follows:
--$15,870,000 classes A-2017 to A-2027 and class A-2030 senior series 2013A bonds 'Asf'; Outlook Stable.
Key Rating Drivers
Adequate Collateral Quality: The trust will be collateralized by approximately $20 million of new fixed-rate private student loans to be originated from deal closing through June 15, 2014, in addition to the existing $18.5 million currently in the 2012 Master Trust. The loans will be originated according to the underwriting criteria for the VSAC Fixed-Rate Private Loan Program.
Sufficient Credit Enhancement (CE): Transaction cash flows were satisfactory under all stressed scenarios at Fitch's 'A' rating category. CE is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance) and excess spread. The parity ratio (total assets to total liabilities) is expected to be 125.05% at closing. Liquidity support will be provided by a capitalized interest fund and debt service reserve fund.
Satisfactory Servicing Capabilities: Day-to-day servicing will be provided by VSAC, which has been servicing its own private loans since 1994. 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 evaluated the sensitivity of the ratings assigned to VSAC 2013A to increased defaults, reduced recoveries and excess spread over the life of the transaction. Fitch's analysis found that the transaction displays some sensitivity to the above factors, showing a potential downgrade to BB and B. For further discussion of our sensitivity analysis, please see the related presale report 'Vermont Student Assistance Corporation, Senior Series 2013A', dated June 5, 2013.
Fitch's stress analysis is discussed in the presale titled 'Vermont Student Assistance Corporation, Senior Series 2013A', dated June 5, 2013.
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;
--'Structured Finance Tranche Thickness Criteria', July 29, 2011;
--'Representations, Warranties and Enforcement Mechanism in Global Structure Finance Transactions', April 17, 2012.
Applicable Criteria and Related Research: Vermont Student Assistance Corporation, Senior Series 2013A (US ABS)
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=7...
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=7...
U.S. Private Student Loan ABS Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=6...
Structured Finance Tranche Thickness Metrics
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=6...
Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions -- Amended
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=6...
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=792971
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NEW YORK--(BUSINESS WIRE)--Fitch Ratings 6.5.2013
Fitch to rate Vermont Student Assistance Corporation, senior series 2013A revenue bonds
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