Fitch Maintains Rating Watch Neg on Nelnet Student Loan Trust, 2005-1 Sub Note; Affirms Sr Note
May 19, 2011 03:28 PM Eastern Daylight Time
NEW YORK?(BUSINESS WIRE)?Fitch Ratings maintains Rating Watch Negative on Nelnet Student Loan Trust?s, 2005-1 subordinate note. Fitch also affirms Nelnet?s senior note at ?AAA?. The Rating Outlook for the senior note remains stable.
Fitch used its ?Global Structured Finance Rating Criteria? and ?FFELP Student Loan ABS Rating Criteria?, as well as the refined basis risk criteria outlined in Fitch?s Sept. 22, 2010 press release ?Fitch to Gauge Basis Risk in Auction-Rate U.S. FFELP SLABS Review? to review the ratings. A full ratings list is shown below.
The rating on the senior note is affirmed based on the sufficient level of credit enhancement consisting of subordination, overcollateralization and the projected minimum excess spread to cover the applicable basis factor stress.
Rating Watch Negative is maintained because Nelnet has not yet resolved the reporting error made in March 2006 resulting in a lower effective total parity. Fitch identified this error in August 2010. Nelnet is expected to apply additional funds to pay down principal above the principal distribution amount (PDA) on the next distribution date (July 2011) to bring the parity to 100%.
Fitch will continue to monitor the performance of the trust and resolve Rating Watch Negative when corrective action has been taken.
Fitch takes the following rating actions:
Nelnet Student Loan Trust, Series 2005-1:
?Class A-3 affirmed at ?AAAsf/LS1?; Outlook Stable;
?Class A-4 affirmed at ?AAAsf/LS1?; Outlook Stable;
?Class A-5 affirmed at ?AAAsf/LS1?; Outlook Stable;
?Class B ?BBBsf/LS3? maintained on Rating Watch Negative.
Additional information is available at ?www.fitchratings.com?.
Applicable Criteria and Related Research:
??Global Structured Finance Rating Criteria? (Aug. 13, 2010);
??U.S.FFELP Student Loan ABS Rating Criteria? (April 11, 2008);
??Fitch to Begin Review of U.S. FFELP SLABS Applying Updated Criteria? (June 29, 2010).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=547326
U.S. FFELP Student Loan ABS Surveillance Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=597566
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