Rhode Island Student Loan Authority 2019 Senior Series A Bonds Assigned Preliminary 'AA (sf)' Rating


  • Rhode Island Student Loan Authority's 2019 senior series A issuance is an ABS transaction backed by private student loans originated under its student loan and consolidation loan programs.
  • We assigned our preliminary 'AA (sf)' rating to the 2019 senior series A bonds.
  • The preliminary 'AA (sf)' rating reflects our view of the transaction's available credit support, initial parity, and the credit quality of both the outstanding loans and the loans to be originated, among other factors.
NEW YORK (S&P Global Ratings) March 14, 2019--S&P Global Ratings today 
assigned its preliminary 'AA (sf)' rating to Rhode Island Student Loan 
Authority's (RISLA's) $63.215 million student loan program revenue bonds 2019 
senior series A (see list).

The bond issuance is an asset-backed securities transaction backed by private 
student loans originated under Rhode Island Student Loan Authority's student 
loan and consolidation loan programs.

The preliminary 'AA (sf)' rating is based on information as of March 14, 2019. 
Subsequent information may result in the assignment of final ratings that 
differ from the preliminary ratings.

The preliminary rating reflects our view of: 
  • The approximately 19.4%-20.0% credit support available based on our 'AA' stressed break-even cash flow scenarios, which provides coverage of approximately 6.7x-6.9x our base case net loss in the 'AA' stressed break-even cash flow scenarios. In the future, RISLA may issue additional bonds out of this trust which may change the credit enhancement available to the bonds.
  • The transaction's approximately 123.53% initial parity (defined as a percentage of the total assets, including outstanding loans and funds in the loan acquisition account, and the reserve account to the total outstanding bonds).
  • The fully funded, non-declining reserve account equal to 3.31% of total trust bonds outstanding balance.
  • The transaction's payment structure, which builds parity to 131%. As long as the target parity is maintained, the trust may release cash to RISLA until Dec. 1, 2024. Beginning Dec. 1, 2024, and thereafter, the trust will use all excess funds to redeem outstanding term bonds from the trust. This turbo feature locks out releases to the issuer, and we expect it to increase overcollateralization and parity during the transaction's later stages.
  • The credit quality of both the outstanding loans in the trust at closing and the loans to be originated during the acquisition period, which are expected to have a similar composition and quality to RISLA's existing portfolio.
  • The timely interest and principal payments by the final maturity dates made in the cash flow runs that simulated our 'AA' rating stress scenarios.
  • A scenario analysis, which indicates that under moderately stressful economic conditions ('BBB' stress scenario), the preliminary 'AA (sf)' rating would not decline more than one rating category in the first year, which is consistent with our credit stability criteria.
  • The transaction's legal structure.
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