Today, November 18th, Fitch Ratings announced that they have published an exposure draft detailing proposed amendments to its rating criteria for U.S. Federal Family Education Loan Program (“FFELP”) student loan ABS. The main proposals upon which feedback is sought include:
Revised assumptions and stresses for deferment, forbearance, IBR, default timing and prepayments
New surveillance application methodology
Fitch Ratings estimates that approximately 35 to 45 percent of existing FFELP student loan ABS tranches would be downgraded based on this new methodology while approximately 35 percent of current subordinate bond ratings could be lowered to non-investment grade
Fitch Ratings will be accepting feedback on the proposals during the consultation period that will end on December 31, 2015.