Fitch Affirms Edsouth Indenture No. 7, LLC Series 2014-3; Outlook Stable

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed the senior and subordinate notes for Edsouth Indenture No. 7, LLC Series 2014-3 at 'AAAsf' and 'Asf', respectively. The Rating Outlook remains Stable.

KEY RATING DRIVERS

High Collateral Quality: The trust collateral consists of 100% rehabilitated Federal Family Education Loan Program (FFELP) loans. Although the trust consists of approximately 100% rehabilitated 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. sovereign rating at 'AAA' with a Stable Outlook.

Sufficient Credit Enhancement: is provided by overcollateralization and excess spread. In addition, the senior notes benefit from subordination provided by the class B note. As of April 2015 report, total parity is 102.78% and senior parity is 105.38%. Cash may be released to the issuer when the specified overcollateralization equals the greater of 2.25% of the adjusted pool balance and $300,000.

Adequate Liquidity Support: is provided by a capitalized interest and reserve fund sized at $5.90 and $0.42 million, respectively. The reserve fund requirement is the greater of 0.25% of the pool balance and 0.15% of the initial pool balance ($304,650.65) as of April 2015.

Acceptable Servicing Capabilities: is provided by Pennsylvania Higher Education Assistance Agency (PHEAA) and Great Lakes Education Loan Services. Fitch believes both to be acceptable servicers of FFELP student loans.

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 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 build-up of CE driven by positive excess spread given favourable 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 ratings:

Edsouth Indenture No. 7, LLC, Series 2014-3

--2014-3A notes at 'AAAsf; Outlook Stable;

--2014-3B notes at 'Asf'; Outlook Stable.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Global Structured Finance Rating Criteria (pub. 31 Mar 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=864268

Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria (pub. 23 Jun 2014)

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

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=987163

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=987163

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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.

View source version on businesswire.com: http://www.businesswire.com/news/home/20150629006316/en/

Fitch Ratings
Primary Analyst
Charlene M. Davis
Director
+1 212-908-0213
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,
[email protected]

Source: Fitch Ratings

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