2008-05-02 23:01:07 -
- Fitch affirms the ratings on the Massachusetts Educational Financing Authority (MEFA), 1997 General Resolution, at 'AAA', as listed below. The affirmation is based upon Fitch's review of the transaction's performance and credit enhancement absent the MBIA policy. Although this affirmation rating does not rely on MBIA's guaranty, MBIA still remains obligated to insure timely interest and ultimate principal payments
to the bondholders.
The affirmation is based upon the performance of the Trust's underlying assets, current credit enhancement as well as the financial and legal structure. The transaction also benefits from a financial guaranty provided by MBIA Insurance Corp. (MBIA). Initially, classes in the trust were rated 'AAA' based solely on the financial guaranty provided by MBIA Insurance Corp. Fitch downgraded MBIA Insurance Corp's insurer financial strength (IFS) to 'AA'; Outlook Negative on April 4, 2008.
Consistent with Fitch's policy in other structured finance sectors, in the event that a trust's underlying rating is higher than the insurer's current IFS rating, the Fitch rating will be based on the underlying rating rather than the insurer's IFS rating.
For more information please refer to 'Fitch Downgrades MBIA's IFS to 'AA'; Outlook Negative', dated April 4, 2008, available on the Fitch Ratings web site at www.fitchratings.com.
As a result of the review, Fitch has affirmed the ratings of the following 28 classes and removed them from Rating Watch Negative:
Education Loan Revenue Bonds, Issue G, Series 1998A, due Dec. 1, 2008, 'AAA'
Education Loan Revenue Bonds, Issue G, Series 1998A, due Dec. 1, 2009, 'AAA'
Education Loan Revenue Bonds, Issue G, Series 1998A, due Dec. 1, 2010, 'AAA'
Education Loan Revenue Bonds, Issue G, Series 1998A, due Dec. 1, 2011, 'AAA'
Education Loan Revenue Bonds, Issue G, Series 1998A, due Dec. 1, 2012, 'AAA'
Education Loan Revenue Bonds, Issue G, Series 1998A, due Dec. 1, 2013, 'AAA'
Education Loan Revenue Bonds, Issue G, Series 1998A, due Dec. 1, 2014, 'AAA'
Education Loan Revenue Bonds, Issue G, Series 1998A, due Dec. 1, 2015, 'AAA'
Education Loan Revenue Bonds, Issue G, Series 1998B, due Dec. 1, 2016, 'AAA'
Education Loan Revenue Bonds, Issue G, Series 1998C, due Dec. 1, 2008, 'AAA'
Education Loan Revenue Bonds, Issue G, Series 1998C, due Dec. 1, 2009, 'AAA'
Education Loan Revenue Bonds, Issue G, Series 1998C, due Dec. 1, 2010, 'AAA'
Education Loan Revenue Bonds, Issue G, Series 1998C, due Dec. 1, 2011, 'AAA'
Education Loan Revenue Bonds, Issue G, Series 1998C, due Dec. 1, 2012, 'AAA'
Education Loan Revenue Bonds, Issue G, Series 1998C, due Dec. 1, 2013, 'AAA'
Education Loan Revenue Bonds, Issue G, Series 1998C, due Dec. 1, 2014, 'AAA'
Education Loan Revenue Bonds, Issue G, Series 1998C, due Dec. 1, 2015, 'AAA'
Education Loan Revenue Bonds, Issue G, Series 1998C, due Dec. 1, 2016, 'AAA'
Education Loan Revenue Bonds, Issue G, Series 2000A, due Dec. 1, 2008, 'AAA'
Education Loan Revenue Bonds, Issue G, Series 2000A, due Dec. 1, 2009, 'AAA'
Education Loan Revenue Bonds, Issue G, Series 2000A, due Dec. 1, 2010, 'AAA'
Education Loan Revenue Bonds, Issue G, Series 2000A, due Dec. 1, 2011, 'AAA'
Education Loan Revenue Bonds, Issue G, Series 2000A, due Dec. 1, 2013, 'AAA'
Education Loan Revenue Bonds, Issue G, Series 2000A, due Dec. 1, 2014, 'AAA'
Education Loan Revenue Bonds, Issue G, Series 2000A, due Dec. 1, 2015, 'AAA'
Education Loan Revenue Bonds, Issue G, Series 2000B, due Dec. 1, 2016, 'AAA'
Education Loan Revenue Bonds, Issue G, Series 2000A, due Dec. 1, 2017, 'AAA'
Education Loan Revenue Bonds, Issue G, Series 2000B, due Dec. 1, 2018, 'AAA'
Collateral supporting the Massachusetts Educational Financing Authority, 1997 General Resolution consists entirely of MEFA private student loans and Graduate Education Loans (GEL). These loans are alternative loan products that are not guaranteed by the federal government or any third party entity. Credit enhancement consists of excess spread, over-collateralization, and a reserve account. In addition, the reserve account has a minimum balance requirement of 3% with a floor of $500,000 for the 1998 issuance and 2% for the 2000 issuance of the outstanding bond balance which is covered by a surety bond also provided by MBIA.
Overall, collateral performance for the trust has been consistent with or better than expectations from a net default and delinquency perspective. The excess spread generated by the trust has been sufficient to cover any losses and pay note principal to build credit enhancement. As a result, trust total asset to liability or parity ratio has increased to approximately 141% as of December 2007.
Borrowers in the MEFA program may be a parent, legal guardian or working spouse of the student or any other individual meeting the credit standards established by MEFA. For the GEL program, the borrower is the student. Although the authority does not require a co-signer, participating institutions generally require a co-signer who meets certain credit standards established by the institutions. In all cases, borrowers must be enrolled in a degree program on at least a half-time basis and be in good standing and make satisfactory academic progress, as defined by each institution.
The trust is 100% serviced by ACS. ACS's seller/servicer private ABS student loan servicing rating is 'Proficient Plus' by Fitch.
Massachusetts Educational Financing Authority was created by the Legislation of the Commonwealth of Massachusetts for the purpose of assisting parents, students and institutions of higher education in financing the costs of education. MEFA provides financial assistance to students attending post-secondary school through the purchase of education loans.
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.
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