Fitch Places Brazos Student Fin Corp. 1998 Indenture on Rating Watch Evolving
KEY RATING DRIVERS
U. S. Sovereign Risk: The trust collateral comprises of approximately 50.6% private student loans and 49.4% Federal Family Education Loan Program (FFELP) loans, where guaranties for the FFELP loans are provided by eligible guarantors and reinsurance provided by the U. S. Department of Education (ED) for at least 97% of principal and accrued interest. The U. S. sovereign rating is currently 'AAA'/Outlook Stable.
Payment Structure: As of June 2016, total parity is 146.57%. Liquidity support is provided by a debt service reserve account sized at its floor of $1,000,000.
Operational Capabilities: Day-to-day servicing is provided by Xerox Education Services LLC., Navient Solutions, Inc., Pennsylvania Higher Education Assistance Agency, and Nelnet Servicing. Fitch believes all servicers are acceptable servicers of FFELP student loans given their long servicing history.
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.
USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10
No third-party due diligence was provided or reviewed in relation to this rating action
Fitch has placed the following ratings on Rating Watch Evolving.
Brazos Student Finance Corporation 1998 Indenture of Trust:
--Class 1998 B-1, 'Asf', Rating Watch Evolving
--Class 2001 B-1 'Asf', Rating Watch Evolving.
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