News Column

Fitch Affirms Massachusetts Educational Finance Authority Issue K; Outlook Remains Stable

June 12, 2014

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings affirms the ratings at 'Asf' and maintains the Outlook at Stable for the student loan revenue bonds issued by Massachusetts Educational Financing Authority (MEFA), Issue K.

A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

Adequate Collateral Quality: As of March 2014, the trust is collateralized by approximately $253 million of private student loans originated by MEFA's Private Student Loan Programs. Fitch projected remaining gross defaults to range between 8%-10% with a 30% recovery rate based on data provided by MEFA.

Sufficient Credit Enhancement (CE): CE is provided by overcollateralization (the excess of trust's asset balance over bond balance) and excess spread. Total parity ratio has increased to 119.21% (March 2014) from the closing parity of 118.14% (June 2013). Excess cash will be used to turbo bond payments until the parity ratio is at least 119.5%, or when 12% of the bonds remain outstanding.

Adequate Liquidity Support: Liquidity support is provided by a debt service reserve fund sized at the greater of 2% of the current bond balance and 1% of the initial bond balance. As of March 2014, the debt service reserve fund has a balance of $4,440,700. In addition, the trust currently has a capitalized interest fund with approximately $2 million.

Acceptable Servicing Capabilities: Xerox Education Services, LLC is responsible for the day-to-day servicing of the loans in the trust. In Fitch's opinion, they are an acceptable servicer of private student loans.

RATING SENSITIVITIES

As Fitch's base case default proxy is derived primarily from historical collateral performance, actual performance may differ from the expected performance, resulting in higher loss levels than the base case. This will result in a decline in CE and remaining loss coverage levels available to the notes and may make certain note ratings susceptible to potential negative rating actions, depending on the extent of the decline in coverage.

Fitch's stress analysis is discussed in the presale titled 'Massachusetts Educational Financing Authority, Issue K, Series 2013', dated June 10, 2013.

The presale report is available to all investors on Fitch's website at 'www.fitchratings.com'. For more information about Fitch's comprehensive subscription service Fitch Research, which includes all presale reports, surveillance, and credit reports on more than 20 asset classes, contact product sales at

+1-212-908-0800 or at 'webmaster@fitchratings.com'.

Fitch affirms the following ratings:

Massachusetts Educational Financing Authority (MEFA) Education Loan Revenue Bonds, Issue K series 2013:

--Series 2013 7/1/2015 at 'Asf'; Outlook Stable;

--Series 2013 7/1/2016 at 'Asf'; Outlook Stable;

--Series 2013 7/1/2017 at 'Asf'; Outlook Stable;

--Series 2013 7/1/2018 at 'Asf'; Outlook Stable;

--Series 2013 7/1/2019 at 'Asf'; Outlook Stable;

--Series 2013 7/1/2020 at 'Asf'; Outlook Stable;

--Series 2013 7/1/2021 at 'Asf'; Outlook Stable;

--Series 2013 7/1/2022 at 'Asf'; Outlook Stable;

--Series 2013 7/1/2023 at 'Asf'; Outlook Stable;

--Series 2013 7/1/2024 at 'Asf'; Outlook Stable;

--Series 2013 7/1/2025 at 'Asf'; Outlook Stable;

--Series 2013 7/1/2029 at 'Asf'; Outlook Stable;

--Series 2013 7/1/2032 at 'Asf'; Outlook Stable.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'U.S. Private Student Loan ABS Criteria' (Jan. 29, 2014);

--'Global Structured Finance Rating Criteria' (May 20, 2014).

--'Massachusetts Educational Financing Authority, Issue K, Series 2013' (June 10, 2013);

--'Massachusetts Educational Financing Authority, Issue K, Series 2013 - Appendix' (June 10, 2013);

--'Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions' (April 17, 2012).

Applicable Criteria and Related Research:

U.S. Private Student Loan ABS Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=730956

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748821

Massachusetts Educational Financing Authority, Issue K, Series 2013 (US ABS)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=709958

Massachusetts Educational Financing Authority, Issue K, Series 2013 -- Appendix

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=709981

Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=676496

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=834364

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.



Fitch Ratings

Primary Analyst

Emily Lee

Director

+1-212-908-0667

Fitch Ratings, Inc.

33 Whitehall Street

New York, NY 10004

or

Committee Chairperson

Tracy Wan

Senior Director

+1-212-908-9171

or

Media Relations:

Sandro Scenga, +1-212-908-0278 (New York)

sandro.scenga@fitchratings.com


Source: Fitch Ratings


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