OREANDA-NEWS. Fitch Ratings has affirmed the Iowa Student Loan Liquidity Corporation Series 2012-1 senior notes at 'AAAsf' and the subordinate notes at 'AAsf'. The Rating Outlook remains Stable for all the notes.

KEY RATING DRIVERS

Adequate Collateral Quality: The trust collateral consists of 100% of Federal Family Education Loan Program (FFELP) loans. The credit quality of the trust collateral is high, in Fitch's opinion, based on the guarantees provided by the transaction's eligible guarantors and at least 97% reinsurance of principal and accrued interest provided by the U.S. Department of Education (ED). The current U.S. sovereign rating is at 'AAA' with a Stable Outlook.

Sufficient Credit Enhancement: Credit enhancement is provided by excess spread and overcollateralization. Additionally, the class A notes benefit from subordination provided by the class B notes. As of January 2016, total parity is at 103.35% and senior parity is at 106.82%. No cash can be released from the trust until all the notes have been paid in full.

Adequate Liquidity Support: Liquidity is provided by a reserve fund sized at the greater 0.25% of the outstanding pool balance and 0.15% of the initial pool balance. The reserve fund has reached to its minimum requirement of $775,730 and should be maintained at this level.

Satisfactory Servicing Capabilities: Aspire Resources, Inc., a servicing division of ISL, is responsible for day-to-day servicing of the trust. Fitch believes Aspire Resources is an acceptable servicer of FFELP student loans. In addition, Pennsylvania Higher Education Assistance Agency (PHEAA) is the back-up servicer for this transaction.

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:

Iowa Student Loan Liquidity Corporation Series 2012-1:
--Class A notes at 'AAAsf'; Outlook Stable;
--Class B notes at 'AAsf'; Outlook Stable.