DBRS Morningstar Assigns Provisional Ratings to Massachusetts Educational Financing Authority Series 2020-A

DBRS, Inc. (DBRS Morningstar) assigned provisional ratings to the following classes of notes to be issued by Massachusetts Educational Financing Authority Series 2020-A (MEFA 2020-A):

-- $202,480,000 Class A Notes at AAA (sf)
-- $8,800,000 Class B Notes at AA (sf)

The ratings are based on a review by DBRS Morningstar of the following considerations:

-- DBRS Morningstar has updated certain assumptions for this transaction. DBRS Morningstar's rating analysis included an assessment of how collateral performance could deteriorate because of macroeconomic stresses related to the Coronavirus Disease (COVID-19) pandemic. This assessment was guided by DBRS Morningstar’s set of macroeconomic scenarios for select economies related to the coronavirus, available in its “Global Macroeconomic Scenarios: June Update,” published on June 1, 2020. DBRS Morningstar initially published macroeconomic scenarios on April 16, 2020. The scenarios were updated on June 1, 2020, and are reflected in DBRS Morningstar’s rating analysis.
-- The updated assumptions consider the moderate macroeconomic scenario outlined in the commentary (the moderate scenario serving as the primary anchor for current ratings). The moderate scenario assumes some success in containment within Q2 2020 and a gradual relaxation of restrictions, enabling most economies a gradual economic recovery in the Q3 2020.
-- DBRS Morningstar revised its base-case default and forbearance assumptions for this transaction.
-- The transaction’s form and sufficiency of available credit enhancement. Overcollateralization, subordination, reserve fund amounts, and excess spread create credit enhancement levels and liquidity that are commensurate with the ratings.
-- Transaction cash flows are sufficient to repay investors under all AAA (sf) and AA (sf) stress scenarios in accordance with the terms of the MEFA 2020-A transaction documents.
-- The sequential-pay structure.
-- The quality and credit characteristics of the student loan borrowers.
-- The capabilities of MEFA and the loan originating agent, Entech Consulting, LLC, with regard to originations and underwriting.
-- The ability of the Servicer, Pennsylvania Higher Education Assistance Agency, to perform collections on the collateral pool and other required activities.
-- The legal structure and expected legal opinions that are consistent with the DBRS Morningstar “Legal Criteria for U.S. Structured Finance.”

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework and its methodologies can be found at: https://www.dbrsmorningstar.com/research/357792.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is Rating U.S. Private Student Loan Securitizations (November 20, 2019), which can be found on dbrsmorningstar.com under Methodologies & Criteria.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

For more information regarding structured finance rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/358308.

For more information regarding the structured finance rating approach and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/359905

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.

The full report providing additional analytical detail is available by clicking on the link under Related Documents below or by contacting us at info@dbrsmorningstar.com.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.

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