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By clicking “I AGREE”, you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s information that becomes accessible to you (the “Information”). References herein to “Moody’s” include Moody’s Corporation. and each of its subsidiaries and affiliates..

 

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Rating Action:

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

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.
© 2022 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

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Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody’s Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $5,000,000. MCO and Moody’s Investors Service also maintain policies and procedures to address the independence of Moody’s Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody’s Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

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 JPY100,000 to approximately JPY550,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​
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