Fitch Affirms Scholar Funding Trust 2013-A
09 February 2016 - 7:53AM
Business Wire
Fitch Ratings has affirmed the Scholar Funding Trust 2013-A
senior notes at 'AAAsf'. The Rating Outlook remains Stable.
KEY RATING DRIVERS
High Collateral Quality: The trust collateral is comprised
entirely of rehabilitated student loans originated under the
Federal Family Education Loan Program (FFELP). The credit quality
of the trust is high, in Fitch's opinion, based on the guarantees
provided by the transaction's eligible guarantor and reinsurance
provided by the U.S. Department of Education (ED) for at least 97%
of principal and accrued interest. The Stable Outlook on the notes
is consistent with Fitch's affirmation of the U.S. sovereign rating
at 'AAA'; Outlook Stable.
Sufficient Credit Enhancement: Credit Enhancement (CE) is
provided by overcollateralization (OC; the excess of trust's asset
balance over bond balance) and excess spread. As of December 2015,
parity is 105.99%. Excess cash can be released as long as the trust
maintains an OC level of the greater of 5.65% CE (105.99% parity)
and $1,500,000.
Adequate Liquidity Support: Liquidity support is provided by a
Debt Service Reserve Fund sized as the greater of 0.25% of the pool
balance and 0.15% of the initial pool balance. The Debt Service
Reserve Fund is sized at $320,364 as of December 2015.
Acceptable Servicing Capabilities: JP Morgan Chase Bank N.A. is
the master servicer and Xerox-ES and Tru Student, Inc. are the
sub-servicers of this trust. Fitch believes all servicers to be
acceptable servicers of FFELP student loans.
On Nov. 18, 2015, Fitch released its exposure draft which
delineates revisions it plans to make to the 'Rating U.S. Federal
Family Education Loan Program Student Loan ABS Criteria', dated
June 23, 2014. Fitch has reviewed this transaction under both the
existing and proposed criteria, which has resulted in affirmation
of the senior note.
RATING SENSITIVITIES
Since the FFELP student loan ABS relies 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, basis risk, and loan extension risk
account for the majority of the risk embedded in FFELP student loan
transactions. Additional defaults, basis shock beyond Fitch's
published stresses, lower than expected payment speed, and other
factors could result in future downgrades. Likewise, a buildup of
CE driven by positive excess spread given favorable basis factor
conditions could lead to future upgrades.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in
relation to this rating action.
Fitch has affirmed the following rating:
Scholar Funding Trust 2013-A:
--Class A note at 'AAAsf'; Outlook Stable.
Additional information is available at www.fitchratings.com.
Applicable Criteria
Counterparty Criteria for Structured Finance and Covered Bonds
(pub. 14 May 2014)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158
Criteria for Interest Rate Stresses in Structured Finance
Transactions and Covered Bonds (pub. 19 Dec 2014)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=838868
Exposure Draft: Rating U.S. Federal Family Education Loan
Program Student Loan ABS Criteria (pub. 04 Dec 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=874971
Global Structured Finance Rating Criteria (pub. 06 Jul 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952
Rating U.S. Federal Family Education Loan Program Student Loan
ABS Criteria (pub. 23 Jun 2014)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=750530
Additional Disclosures
Dodd-Frank Rating Information Disclosure Form
https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=999227
Solicitation Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=999227
Endorsement Policy
https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31
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Fitch RatingsPrimary AnalystHarry KohlAssociate
Director+1-212-908-0837Fitch Ratings, Inc.33 Whitehall StreetNew
York, NY 10004orCommittee ChairpersonMichael DeanManaging
Director+1-212-908-0556orMedia Relations:Sandro Scenga, New York,
+1 212-908-0278Email: sandro.scenga@fitchratings.com