NEW YORK - (Business Wire) Fitch Ratings has affirmed series 1996-A and series 2000-A of student loan asset-backed notes issued by Educational Services Foundation 1996 Indenture. The actions follow a review of trust collateral performance taken in conjunction with Fitch's ongoing review of student loan transactions with auction rate exposure.
Overall, collateral performance for the trust has been consistent with expectations from a net default and delinquency perspective.
Both of the notes are taxable 28-day auction-rate securities earning interest at the maximum rate.
The trust documents define the maximum rate as the lesser of 1-month LIBOR + 1.20% ('AA' or higher) or 2.50% (lower than 'AA'); 16%, or the highest rate the issuer may legally pay; and the net loan rate. The net loan rate is defined as the 91-day Treasury bill rate + 1.50%. The maximum rate definition limits the amount of interest the trust can pay on the auction rate notes.
Parity ratios, or the ratio of assets to liabilities, have increased consistently despite auction failures causing bonds to pay interest at the maximum rate. The total parity ratio for the trust as of Sept. 30, 2008 was 108.52%.
Credit enhancement consists of a debt service reserve fund and excess spread. The student loan portfolio is serviced by SunTech, Inc., Pennsylvania Higher Education Assistance Authority, and Education Services Foundation (neither servicer carries a Fitch Seller/Servicer Rating).
The collateral securing the bonds consists of FFELP student loans and First Rate Solutions Alternative student loans. Depending upon origination date, the FFELP loans are guaranteed up to at least 97% of principal and accrued interest by an eligible guarantor and reinsured by the U.S. Department of Education (ED).
The ratings affirmed are as follows:
--1996-A Student Loan Asset-Backed Notes 'AAA'
--2000-A Student Loan Asset-Backed Notes 'AAA'
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
Fitch Ratings, New York
Paritosh Merchant, 212-908-0321
Andrea Murad, 212-908-0896
or
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Email: sandro.scenga@fitchratings.com
