News Column

Fitch Affirms Senior Notes of Scholar Funding Trust 2012-B

August 25, 2014

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings affirms the senior student loan notes at 'AAAsf' issued by Scholar Funding Trust 2012-B. The Rating Outlook on the senior notes, which is tied to the sovereign rating of the U.S. government, is Stable.

KEY RATING DRIVERS

High Collateral Quality: The collateral consists of 100% rehab 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 reinsurance provided by the U.S. Department of Education (ED) for at least 97% of principal and accrued interest. Fitch currently rates the U.S. 'AAA' with a Outlook Stable.

Sufficient Credit Enhancement (CE): CE is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance) and excess spread. As of the July 2014 servicer report, total parity was 105.99%. Cash is currently being released from the trust since the target OC of 5.65% has been met and maintained.

Adequate Liquidity Support: Liquidity support is provided by a reserve fund currently sized at $409,006 (0.25% of the bond balance, with a floor of $356,732).

Acceptable Servicing Capabilities: JP Morgan Chase Bank N.A. is the master servicer of this trust, with Xerox-ES and Student Assistance Foundation of Montana acting as sub-servicers. Fitch believes all servicers to be acceptable servicers of FFELP student loans.

RATING SENSITIVITIES

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 credit enhancement driven by positive excess spread given favorable basis factor conditions could lead to future upgrades.

Fitch has taken the following rating actions:

Scholar Funding Trust 2012-B:

--Class A-1 affirmed at 'AAAsf'; Outlook Stable;

--Class A-2 affirmed at 'AAAsf'; Outlook Stable.

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

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' dated May 20, 2014;

--'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria' dated June 23, 2014;

--'Scholar Funding Trust 2012-B, Class A Student Loan Asset-Backed Notes (US ABS)', dated Sept. 18, 2012.

A comparison of the transaction's RW&Es to those of typical RW&Es for student loans is available by accessing the reports and links below:

--'Scholar Funding Trust 2012-B, Class A Student Loan Asset-Backed Notes -- Appendix', dated Sept. 18, 2012;

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

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754389

Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=750530

Scholar Funding Trust 2012-B, Class A Student Loan Asset-Backed Notes -- Appendix

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=689334

Scholar Funding Trust 2012-B, Class A Student Loan Asset-Backed Notes (US ABS)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=689157

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=856774

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

Victoria Ohorodnyk, +1 212-908-0866

Associate Director

Fitch Ratings, Inc.

33 Whitehall Street

New York, NY 10004

or

Committee Chairperson

Tracy Wan, +1 212-908-9171

Senior Director

or

Media Relations:

Alyssa Castelli, +1 212-908-0540

alyssa.castelli@fitchratings.com

Source: Fitch Ratings


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