News Column

Fitch Rates Massachusetts Educational Financing Auth Issue I Series 2014 Education Loan Rev Bonds

June 17, 2014

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings assigns ratings to Massachusetts Educational Financing Authority (MEFA) education loan revenue bonds, Issue I, series 2014 as follows:

--$4,000,000 series 2014 Jan. 1, 2017 'Asf'; Outlook Stable;

--$11,000,000 series 2014 Jan. 1, 2018 'Asf'; Outlook Stable;

--$6,000,000 series 2014 Jan. 1, 2019 'Asf'; Outlook Stable;

--$7,000,000 series 2014 5% due Jan. 1, 2019 'Asf'; Outlook Stable;

--$4,000,000 series 2014 Jan. 1, 2020 'Asf'; Outlook Stable;

--$2,510,000 series 2014 Jan. 1, 2021 'Asf'; Outlook Stable;

--$37,490,000 series 2014 5% due Jan. 1, 2021 'Asf'; Outlook Stable;

--$5,000,000 series 2014 Jan. 1, 2022 'Asf'; Outlook Stable;

--$820,000 series 2014 Jan. 1, 2023 'Asf'; Outlook Stable;

--$7,180,000 series 2014 5% due Jan. 1, 2023 'Asf'; Outlook Stable;

--$7,000,000 series 2014 Jan. 1, 2024 'Asf'; Outlook Stable;

--$33,600,000 series 2014 Jan. 1, 2025 'Asf'; Outlook Stable;

--$24,000,000 series 2014 Jan. 1, 2026 'Asf'; Outlook Stable;

--$4,000,000 series 2014 Jan. 1, 2027 'Asf'; Outlook Stable;

--$14,000,000 series 2014 5% due Jan. 1, 2027 'Asf'; Outlook Stable;

--$18,100,000 series 2014 Jan. 1, 2032 'Asf'; Outlook Stable.

KEY RATING DRIVERS

Adequate Collateral Quality: The master trust will be collateralized by approximately $485 million existing fixed-rate private student loans originated with proceeds from certain earlier bond issuances and approximately $185.7 million new fixed-rate private student loans to be originated from deal closing based on a loan origination schedule that will end June 30, 2015. All existing loans have been credit tested, and new fixed-rate private student loans will be originated according to the underwriting criteria for the MEFA loan program and will consist of loans originated under MEFA's immediate repayment, interest-only, deferment and fixed-rate student alternative loan products.

Sufficient Credit Enhancement: Transaction cash flows were satisfactory under all stressed scenarios of Fitch's 'Asf' rating category. Credit enhancement (CE) is provided by overcollateralization (OC) and excess spread. The initial CE for the notes is approximately 8.50%. The initial parity ratio is approximately 109.29%, with a release level of 110.75%.

Adequate Liquidity Support: Liquidity support for Issue I is provided by a debt service reserve fund, which will be fully funded at closing at $9,395,300, 1.4% of the bond balance. The required reserve account will be the lessor of $8 million floor and 1.4% of the current bond balance.

Acceptable Servicing Capabilities: Day-to-day servicing will be provided by Xerox, which has been servicing MEFA loans since 2003. Fitch views its servicing capabilities as highly effective.

RATING SENSITIVITY

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 and/or prepayment speeds than the base case. This will result in a decline in available CE and the remaining loss coverage levels available to the notes. Therefore, note ratings may be susceptible to potential negative rating actions, depending on the extent of the decline in the coverage.

Rating sensitivity results should only be considered as one potential outcome, as the transaction is exposed to multiple dynamic risk factors. Rating sensitivity should not be used as an indicator of future rating performance.

Fitch's stress analysis is discussed in the presale titled 'Massachusetts Educational Financing Authority, Issue I, Series 2014', dated May 1, 2014.

Fitch affirms the following ratings:

--Series 2009 Jan. 1, 2014 at 'Asf' Outlook Stable;

--Series 2009 Jan. 1, 2015 at 'Asf' Outlook Stable;

--Series 2009 5.25% due Jan. 1, 2015 at 'Asf' Outlook Stable;

--Series 2009 Jan. 1, 2016 at 'Asf' Outlook Stable;

--Series 2009 5.25% due Jan. 1, 2016 at 'Asf' Outlook Stable;

--Series 2009 Jan. 1, 2017 at 'Asf' Outlook Stable;

--Series 2009 Jan. 1, 2018 at 'Asf' Outlook Stable;

--Series 2009 5.5% due Jan. 1, 2018 at 'Asf' Outlook Stable;

--Series 2009 Jan. 1, 2019 at 'Asf' Outlook Stable;

--Series 2009 5.5% due Jan. 1, 2019 at 'Asf' Outlook Stable;

--Series 2009 Jan. 1, 2020 at 'Asf' Outlook Stable;

--Series 2009 5.75% due Jan. 1, 2020 at 'Asf' Outlook Stable;

--Series 2009 5.75% term bonds due Jan. 1, 2023 at 'Asf' Outlook Stable;

--Series 2009 6.00% term bonds due Jan. 1, 2028 at 'Asf' Outlook Stable;

--2010 Series A Jan. 1, 2014 at 'Asf' Outlook Stable;

--2010 Series A Jan. 1, 2015 at 'Asf' Outlook Stable;

--2010 Series A Jan. 1, 2016 at 'Asf' Outlook Stable;

--2010 Series A Jan. 1, 2017 at 'Asf' Outlook Stable;

--2010 Series A Jan. 1, 2018 at 'Asf' Outlook Stable;

--2010 Series A Jan. 1, 2019 at 'Asf' Outlook Stable;

--2010 Series A Jan. 1, 2020 at 'Asf' Outlook Stable;

--2010 Series A Jan. 1, 2021 at 'Asf' Outlook Stable;

--2010 Series A Jan. 1, /2022 at 'Asf' Outlook Stable;

--2010 Series A Jan. 1, 2025 at 'Asf' Outlook Stable;

--2010 Series A Jan. 1, 2026 at 'Asf' Outlook Stable;

--2010 Series A Jan. 1, 2027 at 'Asf' Outlook Stable;

--2010 Series A Jan. 1, 2028 at 'Asf' Outlook Stable;

--2010 Series A Jan. 1, 2029 at 'Asf' Outlook Stable;

--2010 Series A Jan. 1, 2030 at 'Asf' Outlook Stable;

--2010 Series B Jan. 1, 2014 at 'Asf' Outlook Stable;

--2010 Series B Jan. 1, 2015 at 'Asf' Outlook Stable;

--2010 Series B Jan. 1, 2016 at 'Asf' Outlook Stable;

--2010 Series B Jan. 1, 2017 at 'Asf' Outlook Stable;

--2010 Series B Jan. 1, 2018 at 'Asf' Outlook Stable;

--2010 Series B Jan. 1, 2019 at 'Asf' Outlook Stable;

--2010 Series B Jan. 1, 2020 at 'Asf' Outlook Stable;

--Series 2010 term bond Jan. 1, 2023 at 'Asf' Outlook Stable;

--Series 2010 term bond Jan. 1, 2031 at 'Asf' Outlook Stable.

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

Applicable Criteria and Related Research:

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

--'U.S. Private Student Loan ABS Criteria' (January 2014);

--'Massachusetts Educational Financing Authority, Issue I, Series 2014 (US ABS)' (May 2014);

--'Massachusetts Educational Financing Authority, Issue I, Series 2014 - Appendix' (May 2014).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

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

U.S. Private Student Loan ABS Criteria

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

Massachusetts Educational Financing Authority, Issue I, Series 2014 (US ABS)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=747279

Massachusetts Educational Financing Authority, Issue I, Series 2014 -- Appendix

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=747444

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=835072

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, New York

Media Relations

Sandro Scenga, +1-212-908-0278

sandro.scenga@fitchratings.com

or

Primary Analyst

Director

Autumn Mascio, +1-212-908-0896

or

Fitch Ratings, Inc.

33 Whitehall Street

New York, NY 10004

or

Secondary Analyst

Associate Director

Harry Kohl, +1-212-908-0837

or

Committee Chairperson

Senior Director

Tracy Wan, +1-212-908-9171


Source: Fitch Ratings


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