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Fitch Rates Nelnet Student Loan Trust 2014-1

February 16, 2014

Fitch Ratings has assigned the following ratings to the Nelnet Student Loan Trust 2014-1, student loan asset-backed notes as follows:

--$445,000,000 class A notes 'AAAsf'; Rating Watch Negative;

--$13,500,000 class B notes 'A+sf'; Outlook Stable.


High Collateral Quality: The trust collateral consists of 100 percent Federal Family Education Loan Program (FFELP) loans, including approximately 25.0 percent of rehabilitated (rehab) loans. In Fitch's opinion, the credit quality of the trust collateral is high based on the guarantees provided by the transaction's eligible guarantors and at least 97 percent reinsurance of principal and accrued interest provided by the U.S. Department of Education (ED).

Rating Watch Negative: All existing and new issuances of 'AAA' rated tranches of FFELP securitizations are on Rating Watch Negative following the revision of the long-term foreign and local currency Issuer Default Ratings of the U.S.

Sufficient Credit Enhancement: Cash flow scenarios for class A and B notes were satisfactory under Fitch's stresses. At closing, total and senior parity are expected to be 100.55 percent and 103.60 percent, respectively. Total credit enhancement (CE) is provided by overcollateralization (OC) and excess spread, and for class A notes, 2.94 percent subordination is provided by class B notes. A target OC amount equal to the greater of 1.25 percent of the adjusted pool balance and $2 million must be met before excess cash can be released from the trust.

Adequate Liquidity Support: Liquidity support for NSLT 2014-1 notes is provided by a $2.5 million capitalized interest fund and a $1.146 million (0.25 percent of outstanding notes) reserve account, both of which are funded at closing with note proceeds.

Acceptable Servicing Capabilities: Nelnet Inc. will service 92.5 percent of the 2014-1 portfolio, while Great Lakes Educational Loan Services Inc. (GLELSI) will service the remaining 7.5 percent. Fitch considers all servicers to be acceptable servicers of FFELP 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 CE driven by positive excess spread given favorable basis factor conditions could lead to future upgrades. For further discussion of Fitch's sensitivity analysis, please see the presale titled 'NSLT 2014-1', dated Jan. 28, available at

Additional information is available at ''.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (May 24, 2013);

--'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria' (May 17, 2013);

--'Representations, Warranties and Enforcement Mechanism in Global Structure Finance Transactions' (April 17, 2012)

Applicable Criteria and Related Research:

Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions -- Amended report_frame.cfm?rpt_id=676496

Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria -- Amended report_frame.cfm?rpt_id=708795

Global Structured Finance Rating Criteria report_frame.cfm?rpt_id=708661

Additional Disclosure

Solicitation Status solicitation?pr_id=819852

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