Fitch Affirms MEFA Issue K; Outlook Stable

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed the ratings for the student loan revenue bonds issued by Massachusetts Educational Financing Authority Issue K at 'Asf'. The Rating Outlook remains Stable.

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

KEY RATING DRIVERS

Collateral Quality: The trust is collateralized by approximately $221 million of private student loans as of March 2016. The loans were originated under MEFA's Student Loan Program. The projected lifetime defaults are expected to range between 9% - 12% of the initial pool balance. A recovery rate of 35% was applied, which was based on data provided by the issuer.

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 slightly to 119.55% (March 2016) from 119.47% (March 2015). The trust just started releasing excess cash, since it has reached its release parity threshold of 119.5%.

Liquidity Support: Liquidity support is provided by a debt service reserve fund (DSRF) sized at the greater of 2% of the current bond balance and 1% of the initial bond balance. As of March 2016, the DSRF has a balance of $3,933,900.

Servicing Capabilities: Xerox Education Services, LLC (Xerox-ES) is responsible for the day-to-day servicing of the loans in the trust. Fitch believes Xerox-ES is an acceptable servicer of student loans due to their long history of servicing these 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 bonds and may make certain bond ratings susceptible to potential negative rating actions, depending on the extent of the decline in coverage. Fitch will continue to monitor the performance of the trust.

DUE DILIGENCE USAGE

No third-party due diligence was provided or reviewed in relation to this rating action.

Fitch has affirmed the following ratings:

Massachusetts Educational Financing Authority Issue K series 2013:

--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

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158

Criteria for Interest Rate Stresses in Structured Finance Transactions and Covered Bonds (pub. 17 May 2016)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=879815

Criteria for Servicing Continuity Risk in Structured Finance (pub. 17 Dec 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=875586

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

U.S. Private Student Loan ABS Criteria (pub. 31 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=868836

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1005713

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1005713

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/20160607006771/en/

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
[email protected]

Source: Fitch Ratings

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