Fitch Ratings affirms the ratings and revises the Outlook to Positive from Stable on the senior and subordinate notes of the NorthStar Education Finance, Inc. 2006-A trust. ?Global structured Finance Rating Criteria? and ?U.S. Private student Loan ABS Criteria? were used to review the transaction. The rating actions are detailed at the end of this press release.
Fitch affirms the ratings on the bonds based on loss coverage multiples which are sufficient to support an ?AAAsf? rating for the senior bonds and ?Asf? rating on the subordinate bonds which were calculated using collateral performance data as of Jan. 31, 2012. Although Fitch?s outlook on the private student loan sector is negative, the Outlook on this specific transaction has been revised to Positive from Stable, since this trust has exhibited strong performance and has a high loss coverage multiple.
Loss coverage multiples were determined by comparing the projected net loss amount to available credit enhancement . Fitch used historical vintage loss data provided by NorthStar to form a loss timing curve representative of the collateral pool. After giving seasoning credit for those loans in repayment, Fitch applied the current cumulative gross loss level to the loss timing curve to derive the expected gross losses over the remaining life. A recovery rate was applied, which was determined to be appropriate based on the latest data provided by the issuer.
Credit enhancement consists of excess spread and overcollateralization. Furthermore, senior notes benefit from additional credit enhancement provided by the subordinate note. Fitch assumed excess spread to be the lesser of the current annualized excess spread; the average historical excess spread; and the most recent 12-month average excess spread. That same rate was applied over the remaining life.
The collateral securing the bonds consist entirely of private Student Loans which were originated by NorthStar Education Finance, Inc. Great Lakes Educational Loan Services, Inc. (Great Lakes) is the primary servicer for the private student loans for the trust. Although Fitch does not explicitly rate Great Lakes, it considers their servicing to be satisfactory.
Fitch affirms the following NorthStar Education Finance, Inc. 2006-A bonds, and revises the Outlook to Positive from Stable:
NorthStar Education Finance, Inc. 2006-A
?Class A-2 at ?AAAsf?; Outlook to Positive from Outlook Stable;
?Class A-3 at ?AAAsf?; Outlook to Positive from Outlook Stable;
?Class A-4 at ?AAAsf?; Outlook to Positive from Outlook Stable;
?Class B at ?Asf?; Outlook to Positive from Outlook Stable.
Additional information is available at ? www.fitchratings.com ?. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
??U.S. Private Student Loan ABS Criteria?, July 19, 2011;
?? Global Structured Finance Rating Criteria ?, Aug. 4, 2011.
Applicable Criteria and Related Research:
U.S. Private Student Loan ABS Criteria
Global Structured Finance Rating Criteria
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