Fitch Ratings has affirmed the 'A' rating of The Education Resources Institute, Inc. (TERI) - 1999 Trust class B notes and removed them from Rating Watch.
Fitch determined as part of its review of the trust's ratings that despite the absence of the TERI guarantee on the loans to mitigate loss severity, the current level of trust parity at over 220% - which represents overcollateralization and a debt service reserve fund with a required minimum balance of $695,400 - is sufficient to maintain the 'A' rating of the class B notes. Also, the trust has incurred only a minimal amount of losses since TERI filed for bankruptcy, as the loans are very seasoned, and incremental losses going forward will be covered by the credit enhancement currently in place. The debt service reserve fund minimum balance is equal to approximately 50% of the current outstanding note balance, and trust parity continues to increase as all eligible principal collections and excess spread are being used to pay down the bonds.
Fitch originally placed the ratings of the trust on Rating Watch Negative as a result of TERI's bankruptcy filing, in order to determine if, absent TERI's ability to pay claims from its general reserves, current credit enhancement levels are sufficient to maintain the current ratings on the class B notes.
Fitch Ratings, New York
Emily Lee, +1-212-908-0667
Aoto Kenmochi, +1-212-908-0867
Sandro Scenga, +1-212-908-0278