Fitch Ratings has affirmed 7 classes of student loan asset-backed notes issued by Nelnet Student Loan Corporation-1, Inc. (fka Union Financial Services-1, Inc.).
Overall, collateral performance for the trust has been consistent with expectations from a net default and delinquency perspective. Approximately 12% of the outstanding notes have floating rates equal to 1 month LIBOR plus a spread. The remaining notes are taxable auction rate securities which are currently earning interest at the maximum rate. The trust documents define the maximum rate as the lesser of 1 month LIBOR + 1.50%, the net loan rate and 18%. The net loan rate is defined as the greater of the 91-day Treasury Bill rate + 1.50%, and interest earned by the underlying assets less trust fees. The maximum rate definition limits the amount of interest the trust can pay on the auction rate notes.
Parity ratios, or the ratio of assets to liabilities, have remained relatively stable despite auction failures causing bonds to pay interest at the maximum rate. The total parity ratio for the trust as of Sept. 30, 2008 was 103.89%.
Credit enhancement consists of excess spread and a debt service reserve fund. Additionally, the class A notes benefit from subordination provided by the lower priority notes. The student loan portfolio is serviced by Nelnet, Inc. which does not carry a Fitch Seller/Servicer Rating.
The collateral supporting the bonds consists of federally guaranteed loans originated under the FFELP (Federal Family Education Loan Program). FFELP loans are guaranteed by an eligible guarantor to at least 97% of principal and accrued interest, depending on the loan origination date.
Nelnet Student Loan Corporation-1, Inc.'s ratings are affirmed as follows:
Series 1999A:
--Senior A-13 at 'AAA';
--Senior A-14 at 'AAA';
--Senior A-15 at 'AAA';
--Senior A-16 at 'AAA';
Series 1996C:
--Subordinate B-3 at 'AA';
Series 1997A:
--Subordinate B-4 at 'AA';
Series 1998A:
--Subordinate B-4 at 'AA'.
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Andrea
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sandro.scenga@fitchratings.com
