Fitch Rates Kentucky Higher Education Student Loan Issue

Fitch Rates Kentucky Higher Education Student Loan Issue

NEW YORK — Fitch Ratings has assigned a rating to the following student loan revenue bonds issued by Kentucky Higher Education Student Loan Corporation:

Ratings for new issuance:

–$75,000,000 senior series 2004A-6 (taxable auction-rate certificates) ‘AAA’;

Existing debt:

–$18,850,000 senior series 2004A-1 (tax-exempt auction-rate certificates) ‘AAA’;

–$57,550,000 senior series 2004A-2 (tax-exempt auction-rate certificates) ‘AAA’;

–$57,600,000 senior series 2004A-3 (tax-exempt auction-rate certificates) ‘AAA’;

–$57,600,000 senior series 2004A-4 (tax-exempt auction-rate certificates) ‘AAA’.

–$72,400,000 senior series 2004A-5 (taxable auction-rate certificates) ‘AAA’;

–$11,000,000 subordinate series 2004B-1 (tax-exempt auction-rate certificates) ‘A’;

The ratings are based on the quality of the Federal Family Education Loan Program (FFELP) student loan collateral, the credit enhancement within the trust, and the sound legal structure of the transaction. Credit enhancement for the senior bonds is in the form of subordination, the reserve fund, and excess spread. The reserve account is sized at 1% of the bonds outstanding with a $500,000 minimum.

The ratings reflect the ability of the trust estate to pay principal at maturity and timely interest. The ratings do not address any carryover amounts that may accrue on the bonds nor do they address the ability of auction bondholders to redeem their bonds at an auction now or in the future.

The delivery of the senior series 2004A-6 bonds follows the issuance of the senior series 2004A-1 through A-5 and subordinate series 2004B-1 bonds on Aug. 12, 2004.

The series 2004 bonds are issued pursuant to the 1st supplemental indenture to a trust indenture, dated as of August 1, 2004. Issuance proceeds will be deposited to the loan account to purchase loans until Aug. 1, 2005, to repay a line of credit, to transfer to the debt service reserve account, and to pay costs of issuance.

The tax-exempt series 2004 bonds are 35-day auction-rate securities, with interest paid semiannually. The taxable series 2004 bonds are 28-day auction-rate securities, with interest paid on the day following each auction period. The legal final maturity for the series A bonds is June 1, 2034.

Currently, 100% of the collateral securing the bonds are loans originated under FFELP. The loans are guaranteed at least 98% of principal and accrued interest by an eligible guarantor(s) and reinsured by the U.S. Department of Education up to the same amounts.

The student loans pledged under the indenture are serviced by Kentucky Higher Education Student Loan Corporation.

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