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I AGREE
02 May 2016
New York, May 02, 2016 -- Moody's Investors Service has assigned provisional long-term ratings
of (P)Aa2 to the Senior Student Loan Revenue Bonds, Series 2016-1A
and (P)A2 to the Subordinate Student Loan Revenue Bonds, Series
2016-1B to be issued by Higher Education Student Assistance Authority
(HESAA), pursuant to the trust indenture dated as of 1 June 2012
as amended and supplemented by a fifth supplemental, dated as of
1 June 2016. The underlying collateral will consist of private
student loans that do not benefit from a guarantee from the US government.
The collateral consists of loans currently included in the trust estate
and others that will be originated and acquired during origination and
recycling periods.
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: Higher Education Student Assistance Authority Student Loan
Revenue Bonds, Series 2016-1
Series 2016-1A Senior Student Loan Revenue Bond Due 12/1/2017,
Assigned (P)Aa2
Series 2016-1A Senior Student Loan Revenue Bond Due 12/1/2018,
Assigned (P)Aa2
Series 2016-1A Senior Student Loan Revenue Bond Due 12/1/2019,
Assigned (P)Aa2
Series 2016-1A Senior Student Loan Revenue Bond Due 12/1/2020,
Assigned (P)Aa2
Series 2016-1A Senior Student Loan Revenue Bond Due 12/1/2021,
Assigned (P)Aa2
Series 2016-1A Senior Student Loan Revenue Bond Due 12/1/2022,
Assigned (P)Aa2
Series 2016-1A Senior Student Loan Revenue Bond Due 12/1/2023,
Assigned (P)Aa2
Series 2016-1A Senior Student Loan Revenue Bond Due 12/1/2024,
Assigned (P)Aa2
Series 2016-1A Senior Student Loan Revenue Bond Due 12/1/2025,
Assigned (P)Aa2
Series 2016-1A Senior Student Loan Revenue Bond Due 12/1/2026,
Assigned (P)Aa2
Series 2016-1A Senior Student Loan Revenue Bond Due 12/1/2027,
Assigned (P)Aa2
Series 2016-1A Senior Student Loan Revenue Bond Due 12/1/2028,
Assigned (P)Aa2
Series 2016-1A Senior Student Loan Revenue Bond Due 12/1/2029,
Assigned (P)Aa2
Series 2016-1A Senior Student Loan Revenue Bond Due 12/1/2030,
Assigned (P)Aa2
Series 2016-1A Senior Student Loan Revenue Bond Due 12/1/2031,
Assigned (P)Aa2
Series 2016-1A Senior Student Loan Revenue Bond Due 12/1/2032,
Assigned (P)Aa2
Series 2016-1A Senior Student Loan Revenue Bond Due 12/1/2039,
Assigned (P)Aa2
Series 2016-1B Subordinate Student Loan Revenue Bond Due 12/1/2046,
Assigned (P)A2
RATINGS RATIONALE
The provisional ratings assigned to the Senior Bonds are based on several
factors including (1) the high quality of the private student loan collateral
currently in the trust and future collateral to be acquired, which
is expected to have net losses of 2.9%; (2) the credit
support provided by approximately 6.6% of overcollateralization
as a percentage of the asset balance at closing, annual expected
excess spread in a range of 1.4% to 2.4% (3)
the liquidity support provided by capitalized interest accounts totaling
$22.9 million and debt service reserve funds funded at the
greater of 2% of the outstanding bond balance or $1 million;
4) the expected subordination of approximately 6.2%,
as a percentage of asset balance, provided by the Class B bonds;
5) the strength of the trust's structure including a feature that traps
excess spread to redeem bonds if parity is less than 105% and allows
releases only after parity has reached 108% and the date is prior
to 1 December 2025; and 6) the experience and collections tools of
HESAA as servicer.
The provisional rating assigned to the Subordinate Bonds is based on (1)
through (3) and (5) through (6) above.
Moody's cumulative net loss expectation for the underlying pool of existing
and new loans to be originated is approximately 2.9%.
The low lifetime net loss expectation is driven by expected recoveries
on defaulted loans of 70%, a rate that is significantly higher
than other private student loan issuers. HESAA, as the loan
servicer, has certain statutorily-authorized powers such
as administrative wage garnishing, which it uses aggressively,
leading to significantly higher collections on recoveries than other servicers.
The principal methodology used in these ratings was "Moody's Approach
to Rating U.S. Private Student Loan-Backed Securities"
published in January 2010. Please see the Ratings Methodologies
page on www.moodys.com for a copy of this methodology.
Factors that would lead to an upgrade or downgrade of the rating:
Up
Moody's could upgrade the ratings on the subordinate notes if net losses
are lower or prepayment rates are lower than Moody's expects.
Down
Moody's could downgrade the ratings of the notes if net losses are higher
or prepayment rates are higher than Moody's expects, or if the servicer's
financial stability or quality of servicing deteriorates.
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 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.
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.
Veeraragoo Selven
Associate Analyst 1
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
JingJing Dang
VP - Senior Credit Officer
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 ratings of (P)Aa2 to senior and (P)A2 to subordinate bonds of Higher Education Student Assistance Authority Student Loan Revenue Bonds, Series 2016-1
No Related Data.
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MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.
MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.
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