Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to one class of notes issued by Brazos Education Loan Authority, Inc. Federal Student Loan Backed Notes, 2018-1, (BELA 2018-1). This is a $63.8 million term ABS securitization. The collateral securing the notes consists of Federal Family Education Loan Program (FFELP) student loans. The majority of the proceeds from the sale of the Notes will be used to refinance all the outstanding notes previously issued under the BSFC 2003-1 Trust.
FFELP loans are guaranteed against default by a third-party guarantor for at least 97% of principal and accrued interest, depending on the loan disbursement date, which is reinsured by the U.S. Department of Education. As of the October 31, 2018 statistical date, 99.8% of the loans in this transaction are guaranteed in an amount up to 98% of such loans principal and accrued interest.
The Brazos Higher Education Service Corporation, Inc. (BHESC) is a nonprofit corporation, founded in 1980, which manages, by contract, a group of several nonprofit companies (Brazos Managed Companies) all founded by Murray Watson, Jr., with the first nonprofit formed in 1975. Brazos Higher Education and the Brazos Managed Companies have been dedicated to providing assistance for higher education for over 40 years. BHESC is headquartered in Waco, Texas.
BHESC is the master servicer for the trust and will oversee the servicing duties of the subservicers. The subservicers for this transactions FFELP portfolio are the Pennsylvania Higher Education Assistance Agency, Nelnet, Inc. and Navient Solutions, LLC. As of the October 31, 2018 statistical date each subservicer services 60.0%, 30.7% and 9.2%, respectively, of the portfolio loans.
Total parity for this transaction at closing will be 103.57%, with an initial credit enhancement level of 3.57% of the original note balance. Credit enhancement consists of overcollateralization, excess interest on portfolio loans and a reserve account funded at closing.
KBRA applied its Global General Rating Methodology for Asset-Backed Securities as part of its analysis of the transactions underlying collateral pool and the proposed capital structure. KBRA also conducted an operational assessment of Brazos as well as a review of the transactions legal structure and transaction documents. KBRA will also review the operative agreements and legal opinions for the transaction prior to closing.
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KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus, is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.
Jenny Ovalle, Director
Brendan Carter, Associate
Charlene M. Davis, Director
Rosemary Kelley, Senior Managing Director