July 25, 2012 / 5:05 PM / 5 years ago

TEXT-S&P rates Educational Funding of the South Inc

 (The following statement was released by the rating agency)
 
OVERVIEW
  -- Educational Funding Of The South Inc.'s issuance is an ABS 
securitization backed by student loans that are at least 97% reinsured by the 
U.S. federal government.
  -- We assigned our 'AA+ (sf)' rating to the series 2012-1 A notes.
  -- The 'AA+ (sf)' rating reflects our view of the transaction's initial 
senior parity, U.S. government's reinsurance, interest and principal payments, 
and scenario analysis, among other factors.
 
NEW YORK (Standard & Poor's) July 25, 2012--Standard & Poor's Ratings Services 
today assigned its 'AA+ (sf)' rating to Educational Funding Of The South 
Inc.'s $511.000 million student loan asset-backed notes series 2012-1 A (see 
list).

The note issuance is asset-backed securitization backed by student loans that 
are at least 97% reinsured by the U.S. federal government.

The rating reflects our view of: 
  -- The transaction's initial senior parity of approximately 103.8%, 
defined as the percentage of the total assets (the initial pool balance, the 
initial cash in the reserve fund, the capitalized interest fund, and the 
collection fund) divided by the new series 2012-1 principal amount, as well as 
the existing series 2007-1 class A principal and accrued interest amounts that 
will remain outstanding;
  -- The U.S. federal government's reinsurance of at least 97% of the 
loans' principal and interest;
  -- The timely interest and principal payments made under stressed cash 
flow modeling scenarios that we believe are consistent with the assigned 'AA+ 
(sf)' rating; and
  -- A scenario analysis indicating that under moderately stressful 
economic conditions (defined as 2.25x expected defaults) the rating would not 
decline more than one rating category in the first year, which is consistent 
with our credit stability criteria.
 
STANDARD & POOR'S 17G-7 DISCLOSURE REPORT
 
SEC Rule 17g-7 requires an NRSRO, for any report accompanying a credit rating 
relating to an asset-backed security as defined in the Rule, to include a 
description of the representations, warranties and enforcement mechanisms 
available to investors and a description of how they differ from the 
representations, warranties and enforcement mechanisms in issuances of similar 
securities.

The Standard & Poor's 17g-7 Disclosure Report included in this credit rating 
report is available here. 

RELATED CRITERIA AND RESEARCH
  -- Presale: Educational Funding Of The South Inc. - Series 2012-1, July 
13, 2012
  -- U.S. Interest Rate Assumptions Revised For May 2012 And Thereafter, 
April 30, 2012
  -- Global Structured Finance Scenario And Sensitivity Analysis: The 
Effects Of The Top Five Macroeconomic Factors, Nov. 4, 2011
  -- U.S. Government Support In Structured Finance And Public Finance 
Ratings, Sept. 19, 2011
  -- United States Of America Long-Term Rating Lowered To 'AA+' On 
Political Risks And Rising Debt Burden; Outlook Negative, Aug. 5, 2011
  -- General Criteria: Principles Of Credit Ratings, Feb. 16, 2011
  -- Methodology: Credit Stability Criteria, May 3, 2010
  -- Methodology: Criteria for Global Structured Finance Transactions 
Subject to a Change in Payment Priorities upon a Nonmonetary EOD, March 16, 
2010
  -- Legal Criteria For U.S. Structured Finance Transactions: Overview Of 
Legal Criteria For U.S. Structured Finance Transactions, Oct. 1, 2006
  -- Student Loan Criteria: Student Loan Programs, Oct. 1, 2004
  -- Student Loan Criteria: The Rating Process For Student Loan 
Transactions, Oct. 1, 2004
  -- Student Loan Criteria: Evaluating Risk In Student Loan Transactions, 
Oct. 1, 2004
  -- Student Loan Criteria: Structural Elements In Student Loan 
Transactions, Oct. 1, 2004
  -- Student Loan Criteria: Rating Methodology For Student Loan 
Transactions, Oct. 1, 2004
 
RATING ASSIGNED
Educational Funding Of The South Inc. - Series 2012-1
 
Class       Rating     Type          Interest             Amount
                                  rate               (mil. $)
2012-1 A    AA+ (sf)   Senior        One-month LIBOR     511.000
2012-1 B    NR         Subordinate   One-month LIBOR      15.000

NR--Not rated.

 (Caryn Trokie, New York Ratings Unit)
 

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