Fitch Affirms Edsouth Indenture No.5, LLC Series 2014-1 Notes; Outlook Stable
Key Rating Drivers
High Collateral Quality: The trust collateral consists of 100% of Federal Family Education Loan Program (FFELP) loans. Although the trust consists of 100% Rehabilitated FFELP Loans, the credit quality of the trust is high, in Fitch's opinion, based on the guarantees provided by the transaction's eligible guarantors and reinsurance provided by the
Sufficient Credit Enhancement: CE is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance) and excess spread. As of the
Adequate Liquidity Support: Provided by a
Acceptable Servicing Capabilities:
Rating Sensitivities
Since 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 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.
Fitch has taken the following rating action:
Edsouth Indenture No.5, LLC Series 2014-1:
-- Class A notes affirmed at 'AAAsf'; Outlook Stable;
-- Class B notes affirmed at 'Asf'; Outlook Stable.
A comparison of the transaction's representations, warranties, and enforcement mechanisms (RW&Es) to those of typical RW&Es for FFELP asset-backed securities is available in the presale appendix. This presale appendix and Fitch's special report on "Representations, Warranties, and Enforcement Mechanisms on Global Structured Finance Transactions," may be accessed via the links provided below.
Additional information is available at 'www.fitchratings.com'.
--'Global Structured Finance Rating Criteria' dated
--'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria' dated
--'Edsouth Indenture No. 5, LLC, Series 2014-1 -- Appendix', dated
--'Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions' dated
Edsouth Indenture No. 5, LLC, Series 2014-1 -- Appendix
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=732955
Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=750530
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754389
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=978628
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Source: Fitch Ratings
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