Fitch Ratings affirms the senior notes at 'AAAsf' and upgrades the
subordinate notes to 'AAsf' from 'Asf', issued by Brazos Education Loan
Authority, Inc. Indenture 2012-1. The Rating Outlook on all notes, which
is tied to the sovereign rating of the U.S. government, is Stable.
KEY RATING DRIVERS
High Collateral Quality: The trust collateral consists of 100% of
Federal Family Education Loan Program (FFELP) 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. 'AAA' with a Stable Outlook.
Sufficient Credit Enhancement (CE): CE is provided by excess spread and
overcollateralization. Additionally, the class A notes benefit from
subordination provided by the class B notes. Parity levels continue to
increase as cash cannot be released until all the bonds are
paid-in-full. As of March 2014, the total and senior parity levels were
at 103.77% and 107.27%, respectively.
Adequate Liquidity Support: Liquidity support is provided by a reserve
account. The reserve is sized equal to the greater of 0.25% of the
current pool balance and 0.15% of the initial pool balance. The balance
of the reserve account as of April 2014 was $236,892.45.
Acceptable Servicing Capabilities: Xerox Education Services, Inc.,
American Education Services, Navient Solutions, Inc. (fka Sallie Mae,
Inc.), Great Lakes and Brazos Loan Servicing, Inc. are responsible for
the day to day servicing of the student loans. Fitch believes these
servicers to be acceptable servicers of FFELP student loans.
Since FFELP student loan ABS rely 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 buildup of credit enhancement driven by positive excess
spread given favorable basis factor conditions could lead to future
Fitch has taken the following rating actions:
Brazos Education Loan Authority, Inc. Indenture Series 2012-1:
--Class A affirmed at 'AAAsf'; Outlook Stable;
--Class B upgraded to 'AAsf' from 'Asf'; Outlook Stable.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' dated May 20, 2014;
--'Rating U.S. Federal Family Education Loan Program Student Loan ABS
Criteria' dated June 23, 2014;
--'Brazos Education Loan Authority Series 2012-1', New Issue dated June
A comparison of the transaction's RW&Es to those of typical RW&Es for
student loans is available by accessing the reports and links below:
--'Brazos Education Loan Authority Series 2012-1', New Issue Appendix
dated June 13, 2014;
'Representations, Warranties, and Enforcement Mechanisms in Global
Structured Finance Transactions -- Amended', dated April 17, 2012.
Global Structured Finance Rating Criteria
Rating U.S. Federal Family Education Loan Program Student Loan ABS
Brazos Education Loan Authority Series 2012-1
Brazos Education Loan Authority Series 2012-1 -- Appendix
Representations, Warranties, and Enforcement Mechanisms in Global
Structured Finance Transactions
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PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS
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CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH
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