Boston, MA 09/15/2014 (wallstreetpr) – According to reports, Fitch Ratings has affirmed all the rankings given to KeyCorp (NYSE:KEY) Student Loan Trust 2005-A Group II. There were a few outstanding notes that KEY student loan trust issued sometime back. Currently, the cumulative default exceeds 17%; therefore, the company has put a subordinate note principal trigger in order to control it. Due to this step of KEY, only class A notes can receive the principal amount.
Fitch’s Response:
KeyCorp (NYSE:KEY) has accelerated the pay down for all the outstanding notes, as a result of which, Fitch has revised the outlook of class A notes of the company to stable from negative. Other notes i.e. class B and C notes have been given the same ranking, and their negative outlook has not been changed by the company. A few things that played a vital role in Fitch’s decision-making process are-
Credit Enhancement: It is provided by over-collateralization or excess spread and the benefit offered by junior notes to senior notes. If one pays attention to the distribution data as of June 2014, he can find that total, subordinate and senior parity ratios of KEY are respectively 104.53%, 122.50% and 192.09%.
Collateral Quality: KEY student loan trust is collateralized by total private student loan amount of $246 million (approximately). Experts think that projected default in loans will be between 15%-20% of total principal amount. Over the past sometimes, KeyCorp (NYSE:KEY) has maintained a recovery rate of close to 15% which decent enough if compared to other players in the same industry.
Other two things that played a significant role during this process are servicing capabilities and liquidity support. Fitch has derived the current ranking with the help of historical data, difference between expected and actual results and financial results over the past few months. The management of KeyCorp (NYSE:KEY) looks forward to maintaining the current outlook in coming months.
