Fitch to Rate State of Alaska Student Loan Corporation, Series 2013A; Presale Issued
--$144,730,000 class A student loan asset-backed notes, 'AAA(EXP)'; Outlook Negative.
KEY RATING DRIVERS
High Collateral Quality: The trust collateral is comprised of Federal Family Education Loan Program (FFELP) loans, including less than 5% rehabilitation loans, with 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.
Negative Rating Outlooks Assigned: Fitch's Rating Outlook for all existing and new issuances of 'AAA' rated tranches of FFELP securitizations is Negative, which reflects Fitch's Negative Rating Outlook on the long-term foreign and local currency Issuer Default Ratings (IDRs) of the U.S.
Sufficient Credit Enhancement: Cash flow scenarios for the 2013A notes were satisfactory under Fitch's stresses. At closing, total parity is expected to be 103.25%. Total credit enhancement (CE) is provided by overcollateralization (OC) and excess spread.
Adequate Liquidity Support: Liquidity support for the series 2013A notes is provided by a $500,000 capitalized interest fund and a debt service reserve fund sized at the greater of 0.25% of the current pool balance or 0.15% of the initial pool balance, each funded at closing.
Acceptable Servicing Capabilities: Servicing will be provided by The Alaska Commission on Postsecondary Education (ACPE). Pennsylvania Higher Education Assistance Agency (PHEAA) is the backup servicer. Fitch has reviewed the servicing operations of both ACPE and PHEAA, and believes them to be acceptable servicers of FFELP student loans.
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. Likewise, a buildup of credit enhancement driven by positive excess spread given favorable basis factor conditions could lead to future upgrades.
Key Rating Drivers and Rating Sensitivities are further described in the accompanying pre-sale report.
Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (June 6, 2012);
--'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria' (April 3, 2012);
--'Alaska Student Loan Corporation, Series 2013A' (March 13, 2013).
Applicable Criteria and Related Research Alaska Student Loan Corporation, Series 2013A (US ABS)
Global Structured Finance Rating Criteria
Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria
Posted: March 22, 2013