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| Fitch Rates Arizona Educational Loan Marketing Corp. Educational Loan Revenue Bonds, Series 2003C & D
NEW YORK--(BUSINESS WIRE)--Aug. 28, 2003--On August 26, 2003, Fitch Ratings assigned ratings to the following series of Educational Loan Revenue Bonds issued by Arizona Educational Loan Marketing Corporation (AELMAC): -- $215,000,000 Educational Loan Revenue Bonds, Senior Series Adaptive intelligence for a serious advantage: business, investment and technology- BizVantage! 2003C-1, 'AAA';-- $61,750,000 Educational Loan Revenue Bonds, Senior Series 2003C-2, 'AAA';-- $61,700,000 Educational Loan Revenue Bonds, Senior Series 2003C-3, 'AAA';-- $18,000,000 Educational Loan Revenue Bonds, Senior Series 2003C-4, 'AAA';-- $4,750,000 Educational Loan Revenue Bonds, Senior Series 2003C-5, 'AAA';-- $38,800,000 Educational Loan Revenue Bonds, Subordinate Series2003 D, 'A'. In addition, Fitch affirmed the rating on the following outstanding series: -- $75,000,000 Educational Loan Revenue Bonds, Senior Series 2002 E-1, 'AAA';-- $75,000,000 Educational Loan Revenue Bonds, Senior Series 2002 E-2, 'AAA';-- $75,000,000 Educational Loan Revenue Bonds, Senior Series 2002 E-3, 'AAA';-- $75,000,000 Educational Loan Revenue Bonds, Senior Series 2002 E-4, 'AAA';-- $125,000,000 Educational Loan Revenue Bonds, Senior Series 2002 C-1, 'AAA';-- $75,000,000 Educational Loan Revenue Bonds, Senior Series 2002 C-2, 'AAA';-- $50,000,000 Educational Loan Revenue Bonds, Senior Series 2002 C-3. 'AAA';-- $25,000,000 Educational Loan Revenue Bonds, Senior Series 2002 D-1, 'A';-- $25,000,000 Educational Loan Revenue Bonds, Senior Series 2002 D-1, 'A';-- $64,000,000 Educational Loan Revenue Bonds, Senior Series 2002A A-1, 'AAA';-- $64,000,000 Educational Loan Revenue Bonds, Senior Series 2002A A-2, 'AAA';-- $40,000,000 Educational Loan Revenue Bonds, Senior Series 2002A A-3, 'AAA';-- $32,000,000 Educational Loan Revenue Bonds, Subordinate Series 2002 B-1, 'A';-- $75,000,000 Educational Loan Revenue Bonds, Senior Series 2001A A-1, 'AAA';-- $75,000,000 Educational Loan Revenue Bonds, Senior Series 2001A A-2, 'AAA';-- $75,000,000 Educational Loan Revenue Bonds, Senior Series 2001A A-3, 'AAA';-- $66,000,000 Educational Loan Revenue Bonds, Senior Series 2001A A-4, 'AAA';-- $25,000,000 Educational Loan Revenue Bonds, Subordinate Series 2001A B, 'A';-- $250,000,000 Educational Loan Revenue Bonds, Senior Series 1996D, 'AAA';-- $150,000,000 Educational Loan Revenue Bonds, Senior Series 1995B, 'AAA';-- $150,000,000 Educational Loan Revenue Bonds, Senior Series 1995C, 'AAA';-- $40,750,000 Educational Loan Revenue Bonds, Subordinate Series 1995A, 'A';-- $3,900,000 Educational Loan Revenue Bonds, Jr. Subordinate Series 1995, NR; -- $5,000,000 Educational Loan Revenue Bonds, Senior Series 1993 A-D, 'AAA';-- $3,000,000 Educational Loan Revenue Bonds, Subordinate Series 1993, 'A';-- $5,700,000 Educational Loan Revenue Bonds, Jr. Subordinate Series 1993, NR; -- $13,670,000 Educational Loan Revenue Bonds, Senior Series 1992, 'AAA';-- $2,750,000 Educational Loan Revenue Bonds, Subordinate Series 1992, 'AAA'.The ratings are based on the quality of the student loan portfolio, consisting entirely of Federal Family Education Loan Program (FFELP) student loans; the reserve fund, sized at 0.75% of the aggregate principal amount of bonds outstanding, with a minimum of $500,000; the ability of the transaction to pass cash flow stress scenarios at each rating level; and the sound legal structure. In addition, the ratings on the Senior Series 2003C bonds are based on 9.4% subordination of the Subordinate and unrated Junior Subordinate bonds, and the ratings on the Subordinate Series 2003D bonds are base on 0.5% subordination provided by unrated Junior Subordinate bonds. The ratings reflect the ability of the trust to redeem bonds at maturity and pay timely interest. The ratings do not address the ability of the trust to pay carryover interest or the ability of the auction-rate bondholders to successfully redeem their bonds at an auction date now or in the future. The series 2003C and 2003D bonds are issued under the 15th supplemental indenture dated as of August 15, 2003 to the trust indenture dated September 1, 1992. The series 2002C and 2002D bond proceeds will be used to acquire FFELP student loans until April 1, 2004, make a deposit to the reserve account, pay costs of issuance, and refund certain outstanding obligations of the trust. Interest on the senior series 2003C-1 bonds is indexed to the three-month London Interbank Offered Rate (LIBOR) rate plus a spread to be determined and paid quarterly beginning on Dec. 1, 2003. The series 2003C-1 bond principal will be paid according to a targeted amortization schedule based on a varying constant prepayment rate (CPR), resulting in a 6.8-year weighted average life. The first payment is scheduled to occur on June 1, 2006, and the legal final maturity is set for June 1, 2023. Series 2003C-2 and 2003C-3 are taxable, 28-day auction-rate bonds that pay interest on the first business day following each auction period. The legal final maturity date for the series 2003C-2 and 2003C-3 bonds is March 1, 2038. Series 2003C-4 and subordinate series 2003D are tax-exempt, 35-day auction-rate bonds that pay interest each March 1 and Sept. 1, beginning in March 2004. The legal final maturity date for the series 2003C-4 and 2003C-5 is March 1, 2038. Series 2003C-5 consists of fixed rate-bonds that pay interest at a rate to be determined on each March 1 and Sept. 1, beginning in March 2004. The legal final maturity date for the series 2003C-5 bonds is March 1, 2009. The series 2003C and 2003D bonds are subject to mandatory redemption from acquisition and recycling money not expended as of April 1, 2004 and Dec. 1, 2005, respectively. Thereafter, all student loan payments received by the trust will be used to pay bond principal. The collateral securing the bonds consists of only FFELP student loans. The FFELP loans are guaranteed 100% or 98% by an eligible guarantor and re-insured by the U.S. Department of Education (ED) depending on their disbursement date. AELMAC was created in 1982 under Arizona nonprofit corporation law as a tax-exempt 501(c)(3) entity and has the ability to issue tax-exempt debt under section 150(d) of the Internal Revenue Code. AELMAC was organized for the purposes of providing access to education as the state's sole eligible lender under the Higher Education Act of 1965 and providing a secondary market and warehousing facility for educational loans. The bonds issued by AELMAC are limited obligations of the corporation, secured by payments and other income from the student loan portfolio and other permitted investments pledged to the trust under the indenture. In May 1992, AELMAC's board formed Southwest, also an Arizona nonprofit corporation, to provide administrative and management services to AELMAC and the Florida Educational Loan Marketing Association (FELMAC). FELMAC is a nonprofit corporation that provides services similar to AELMAC but for student loans in Florida. FELMAC is also able to issue tax-exempt debt through its 150(d) tax status. Southwest is the sole member of both AELMAC and FELMAC. Southwest continues to service the majority of the student loan portfolio. The remaining student loan portfolio is serviced by Affiliated Computer Services, Inc. (ACS) and Sallie Mae Servicing Corp. The lead underwriter on this transaction is UBS. For additional information see the presale report titled Arizona Educational Loan Marketing Corp, Series 2003 C and D, dated August 8, 2003.
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