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Fitch Affirms Brazos Student Finance Corp. 2003 Indenture Trust


Published on 2012-09-10 13:16:24 - Market Wire
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NEW YORK--([ ])--Fitch Ratings affirms the 'AAAsf' ratings on the senior notes and the 'BBsf' ratings on the subordinate notes issued by Brazos Student Finance Corp. - 2003 Indenture Trust. The Negative Outlook is maintained on the senior notes and the Outlook on the subordinate notes is revised to Stable from Positive. A full rating list is shown below.

The affirmations of the senior and subordinate notes are based on sufficient level of enhancement in the trust, consisting of any combination of subordination, overcollateralization, and projected minimum excess spread to cover the applicable risk factor stresses. The collateral consists of approximately 81.3% FFELP loans and 18.7% private student loans.

The Negative Outlook on the senior notes is tied to the outlook on the U.S. sovereign rating. The revision to a Stable Outlook on the subordinate notes is primarily due to the trust's ability to continue to generate positive excess spread to build total parity up to its cash release level of 103%. Over the past year, total parity has increased from 101.70% to 102.29%.

For the portion of each trust that is backed by private student loans, Fitch conducted a review of the collateral performance that involved the calculation of loss coverage multiples based on the most recent data. A projected net loss amount was compared to available credit enhancement to determine the loss multiples. Fitch used proxy historical vintage loss data to form a loss timing curve. After giving credit for seasoning of loans in repayment, Fitch applied the current cumulative gross loss level to this loss timing curve to derive the expected gross losses over the remaining life for each trust. A recovery rate was applied, which was determined to be appropriate based on the latest data provided by the issuer. In addition, Fitch assumed excess spread to be the lesser of the current annualized excess spread; the average historical excess spread; and the most recent 12-month average excess spread, and applied that same rate over the remaining life.

Fitch has taken the following rating actions:

Brazos Student Finance Corp. Amended and Restated 2003 Indenture Trust

--Series 2003 A-3 affirmed at 'AAAsf'; Outlook Negative;

--Series 2003 A-4 affirmed at 'AAAsf'; Outlook Negative;

--Series 2003 B-1 affirmed at 'BBsf'; Outlook to Stable from Positive.

Additional information is available at '[ www.fitchratings.com ]'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' dated June 6, 2012;

--'U.S. Private Student Loan ABS Criteria' dated Jan. 31, 2012;

--'Rating U.S. Federal Family Education Loan Program Student Loan ABS' dated April 3, 2012.

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679923 ]

U.S. Private Student Loan ABS Criteria

[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=667570 ]

Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria

[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=675202 ]

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