2008-10-31 02:50:01 -

- Fitch Ratings assigns an 'AA/F1+' rating to North Carolina State Education Assistance Authority's $309,855,000 tax-exempt education loan revenue and refunding bonds senior 2008-2 series (the bonds). The rating is based on the support provided by a direct-pay letter of credit (LOC) issued by Royal Bank of Canada, acting through its New York Branch (the bank), securing the bonds. The

bank is obligated to make payments of principal and interest on the bonds upon maturity, acceleration and redemption, as well as the purchase price for tendered bonds.

The rating will expire upon the earliest of: Oct. 30, 2011, the stated expiration date of the LOC, unless such date is extended; any prior termination of the LOC; and defeasance of the bonds. The LOC provides full coverage of principal plus an amount equal to 202 days' interest at a maximum rate of 12% based on a 365-day year and purchase price for tendered bonds. The Remarketing Agent for the bonds is RBC Capital Markets.

The bonds initially bear interest at the weekly interest rate, but may be converted to term rates. Interest payments are the first business day of March and September of each year, commencing March 2, 2009. Bondholders may tender their bonds on any business day, provided the trustee is given prior notice of the purchase demand. The bonds are subject to mandatory tender on any conversion date, any substitution date, the fifth business day prior to the stated expiration or termination date of the LOC (unless the LOC has been extended or an alternate LOC has been delivered). Optional and mandatory redemption provisions also apply to the bonds.

The proceeds of the 2008-2 series bonds will be used to refund $86,500,000 of the authority's tax-exempt guaranteed student loan revenue bonds 2006 series Q-1 and $63,500,000 of the authority's tax-exempt guaranteed student loan revenue bonds 2006 series Q-3, both of which are auction-rate bonds and were issued pursuant to the 1995 General Resolution, and $159,855,000 of the authority's state education assistance authority student loan revenue bonds, series 2005-A A1, which are variable-rate demand bonds and were issued pursuant to the 2005 General Resolution.

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
Tracy Wan, +1-212-908-9171
Nicole Edwards, +1-212-908-9114
Cindy Stoller, +1-212-908-0526 (Media Relations)
cindy.stoller@fitchratings.com