$501 million of asset-backed securities rated
New York, August 06, 2014 -- Moody's Investors Service has assigned provisional ratings of (P)Aaa to
the 2014 Series Class A and (P)Aa1 to the 2014 Series Class B Bonds to
be issued by South Carolina Student Loan Corporation (1996 Indenture).
The underlying collateral consists of Federal Family Education Loan Program
(FFELP) consolidation and non-consolidation student loans.
Moody's issues provisional ratings in advance of the final sale of securities.
Upon a conclusive review of the final documentation, Moody's will
endeavor to assign final ratings to the securities. Final ratings
may differ from provisional ratings.
The complete rating actions are as follows:
Issuer: South Carolina Student Loan Corporation (1996 Indenture)
$328,000,000, 2014 Series A-1, Assigned
(P)Aaa
$100,000,000, 2014 Series A-2, Assigned
(P)Aaa
$73,000,000, 2014 Series B, Assigned (P)Aa1
RATINGS RATIONALE
The ratings are based on the underlying collateral, which consists
of Federal Family Education Loan Program (FFELP) consolidation and non-consolidation
student loans, which are indirectly guaranteed by the U.S.
Department of Education for a minimum of 97% of defaulted principal
and accrued interest; the overcollateralization of the trust,
which is expected to have an initial parity level of approximately 105.5%
and senior parity level of at least 112.0%; a debt
service reserve fund, which is expected to be the greatest of (i)
the sum of the reserve requirements for each series of bonds (1.0%
of the 2005 Series and 2006 Series bonds outstanding and 0.25%
of the 2014 Series bonds outstanding), (ii) 0.1% of
the original balance of all bonds currently outstanding and (iii) $750,000;
a supplemental reserve fund expected to be funded at $137.4
million at closing; 5.84% subordination provided by
the 2014 Series subordinate Class B bonds; and excess spread that
is expected to average between 1.10% and 1.30%
per annum; as well as the expertise and experience of South Carolina
Student Loan Corporation as servicer and Nelnet Servicing, LLC as
back-up servicer for this transaction. The expected net
loss for South Carolina Student Loan Corporation (1996 Indenture) is approximately
0.36%..
The principal methodology used in this rating was "Moody's Approach to
Rating Securities Backed by FFELP Student Loans" published in April 2012.
Please see the Credit Policy page on www.moodys.com for
a copy of this methodology.
Methodology Adjustment for South Carolina Student Loan Corporation (1996
Indenture)
The default assumptions Moody's used to analyze the consolidation loans
in this transaction differ from those in the methodology. For consolidation
loans, Moody's expects higher remaining lifetime defaults because
it expects a more back-ended expected loss curve. Therefore,
Moody's used a higher cumulative default rate.
Factors that would lead to an upgrade or downgrade of the rating:
Up
Moody's could upgrade the ratings if performance is materially better
than it currently expects, specifically, if net losses are
lower than it currently expects, or if credit enhancement builds
up more than it currently expects.
Down
Because the US Department of Education guarantees at least 97%
of principal and accrued interest on defaulted loans, Moody's could
downgrade the ratings of the notes if it were to downgrade the rating
on the United States government. Moody's could downgrade the ratings
if performance is materially worse than it currently expects, specifically,
if net losses or voluntary prepayments are higher than it currently expects,
or if the loan pool pays down too slowly to pay off the notes by maturity.
Stress Scenarios:
Moody's quantitative analysis entails an evaluation of scenarios
that stress factors contributing to sensitivity of ratings and take into
account the likelihood of severe collateral losses or impaired cash flows.
REGULATORY DISCLOSURES
For further specification of Moody's key rating assumptions and
sensitivity analysis, see the sections Methodology Assumptions and
Sensitivity to Assumptions of the disclosure form.
Moody's describes the stress scenarios it has considered for this
rating action in the section "Rating Rationale" of this press
release.
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides certain regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this rating action, and
whose ratings may change as a result of this rating action, the
associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Henry Acosta
Analyst
Structured Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Irina Faynzilberg
VP - Sr Credit Officer/Manager
Structured Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's assigns provisional ratings to South Carolina Student Loan Corporation (1996 Indenture), 2014 Series