Fitch Downgrades KnowledgeFunding of Ohio 2005 Indenture Subordinate Bonds; Outlook Stable
Business Wire, Dec 01, 2009
NEW YORK — Fitch Ratings affirms the ratings on the senior student loan notes and
downgrades the subordinate bonds of the KnowledgeFunding of Ohio 2005
Indenture of Trust; removing any ratings from Negative Watch and
assigning Stable Outlooks to all ratings. The senior parity has been
increasing, helped by redemption of the senior notes. However, the
trust’s excess spread level has not been meeting expectations, and the
parities for the subordinate bonds remain well below 100%. A complete
list of rating actions is at the end of this press release.
The subordinate bonds were placed on Rating Watch Negative on Oct. 31,
2008 as a result of disruptions in the auction-rate market. A detailed
review of the transactions, applying Fitch’s Global Structured Finance
Rating Criteria, revealed that the trust has not been producing
sufficient excess spread due to increased costs associated with the
auction-rate securities. The downgrades are the result of increased
uncertainty of parity build-up that will allow the full redemption of
the subordinate bonds. The parities for the trust, as of September 2009,
were 94.80% and 106.88% for the subordinate and senior bonds,
respectively. Stable Outlooks are assigned because the ratings are
expected to remain stable for the next two years.
The collateral supporting KnowledgeFunding of Ohio 2005 Indenture of
Trust consists entirely of federally guaranteed student loans originated
under the Federal Family Education Loan Program (FFELP). FFELP loans are
guaranteed at least 97% of principal and accrued interest, depending on
the loan origination date.
Fitch affirms and assigns Outlooks to the following senior classes of
KnowledgeFunding of Ohio 2005 Indenture of Trust bond:
–2005 class A-1 notes at ‘AAA/LS1′; Outlook Stable;
–2005 class A-2 notes at ‘AAA/LS1′; Outlook Stable;
–2005 class A-3 notes at ‘AAA/LS1′; Outlook Stable;
–2006 class A-1 notes at ‘AAA/LS1′; Outlook Stable;
–2006 class A-2 notes at ‘AAA/LS1′; Outlook Stable;
–2006 class A-3 notes at ‘AAA/LS1′; Outlook Stable.
Fitch downgrades and removes from Rating Watch Negative, and assigns
Outlooks to the following subordinate classes of KnowledgeFunding of
Ohio 2005 Indenture of Trust notes:
–2005 class C-1 notes to ‘BB/LS3′ from ‘A/LS3′; Outlook Stable;
–2006 class C-1 notes to ‘BB/LS3′ from ‘A/LS3′; Outlook Stable.
The following applicable criteria report is available on Fitch’s web
site at ‘www.fitchratings.com’:
‘Global Structured Finance Rating Criteria’ dated Sept. 30, 2009.
Additional information is available at ‘www.fitchratings.com’.
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
DISCLAIMERS
family pledge
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