Fitch Ratings affirms all outstanding notes issued from Nelnet Student Loan Trust 2014-1 (Nelnet 2014-1). The Rating Outlook on all outstanding notes remains Stable.
KEY RATING DRIVERS
High Collateral Quality: The trust collateral consists of 100% of Federal Family Education Loan Program (FFELP) loans, including approximately 24.5% of rehabilitated 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. sovereign rating at 'AAA', Outlook Stable.
Sufficient Credit Enhancement: CE is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance) and excess spread. As of the November 2014 collection period, total parity is 101.27% and senior parity is 104.67%. Currently, cash is being released as the trust has reached the target OC release level of the greater of 1.25% of the adjusted pool balance and $2,000,000.
Adequate Liquidity Support: Is provided by a $2.5 million capitalized interest account and $1.049 million reserve account as of the November 2014 collection period. The reserve account is sized at the greater of 0.25% of outstanding notes and $458,500 floor.
Acceptable Servicing Capabilities: National Education Loan Network, Inc. services approximately 92.78% of the 2014-1 portfolio. Great Lakes Education Loan Services Inc. (GLESI) services the remaining portion of the portfolio. In Fitch's opinion, both are acceptable servicers of FFELP student loans.
RATING SENSITIVITIES
Since FFELP student loan ABS relies 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 upgrades.
Fitch has affirmed the following ratings:
Nelnet Student Loan Trust 2014-1:
-- Class A notes at 'AAAsf'; Outlook Stable;
-- Class B notes at 'A+sf'; Outlook Stable.
A comparison of the transaction's representations, warranties, and enforcement mechanisms (RW&Es) to those of typical RW&Es for FFELP asset-backed securities is available in the presale appendix. This presale appendix and Fitch's special report on 'Representations, Warranties, and Enforcement Mechanisms on Global Structured Finance Transactions,' may be accessed via the links provided below.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (May 20, 2014);
--'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria' (June 23, 2014);
--'Nelnet Student Loan Trust 2014-1 - Appendix' (Jan. 28, 2014);
--'Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions' (Oct. 31, 2014).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria - Effective from 20 May 2014 to 4 August 2014
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748821
Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=750530
Nelnet Student Loan Trust 2014-1 -- Appendix
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=731195
Representations, Warranties and Enforcement Mechanisms in Global Structured Finance Transactions
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=799248
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=969955
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