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Fitch Ratings 'negative' about senior student loan notes

JACKSON — Fitch Ratings has affirmed the senior student loan notes issued by Mississippi Higher Education Assistance Corp. (MHEAC), 1993 Trust Indenture. The Rating Outlook is “negative.”

Fitch wrote: “The collateral supporting the notes comprises 95 percent cash and 5 percent student loans originated under the Federal Family Education Loan Program (FFELP). The Negative Outlook on the senior notes is tied to the outlook on the U.S. sovereign rating and potential negative carry associated with cash-backed collateral upon expiration of guaranteed investment contracts. “

Fitch reports it used its Global Structured Finance Rating Criteria and U.S. FFELP Student Loan ABS Rating Criteria to review the ratings.

Fitch said: “The ratings on the senior notes are affirmed based on a sufficient level of credit enhancement from a combination of overcollateralization and projected minimum excess spread.

“After reviewing the trust’s performance, it was determined that the trust possessed sufficient cash, cash reserves and principal receivables that would ensure that the outstanding bonds could be paid in full in the near term. Although maximum bond interest rates held for a sustainable period of time would typically have a detrimental effect on the ability of the trust to pay down the bonds before their legal final maturities, the trust has entered into guaranteed investment contracts on the funds held in the surplus account and the reserve fund that earn interest at the bond rate plus a spread. If interest rates increase, the funds in those accounts receive an interest rate that prevents negative spread.”

Fitch has taken the following rating actions:

MHEAC 1993 Trust Indenture

• Class 1996 A affirmed at “AAAsf;” outlook, negative

• Class 1998 B affirmed at “AAAsf;” outlook, negative


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