Fitch Takes Various Rating Actions on PARTS Series 2007-CT1 Notes; Assigns Negative Outlook

NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed the senior notes and downgraded the subordinate notes from the private student loan transaction PARTS 2007-CT1. Fitch's Global Structured Finance Rating Criteria and Private Student Loan Asset-Backed Securities (ABS) Criteria are applied for the review of the transaction.

Fitch affirms the ratings on the senior notes as the loss multiple was sufficient to affirm the ratings, reflective of adequate credit enhancement. Fitch downgrades the ratings on the mezzanine and junior subordinate notes as the loss multiples were indicative of lower ratings tied to the higher than expected default levels. Fitch has removed all ratings from Rating Watch Negative and assigned Negative Outlooks, reflecting Fitch's concern that the collateral performance may continue to deteriorate and Fitch's view on the private student loan sector in general.

Loss multiples based on the latest performance data were derived to determine the appropriate ratings. The projected net loss amounts were compared to available credit enhancement to determine the loss multiples for each rating category, given a loss timing curve representative of each pool depending on loan composition. After giving credit for seasoning of loans in repayment, Fitch applied the trust's current cumulative gross loss level to this loss timing curve to derive the expected gross losses over the projected remaining life. A recovery rate was applied, at the level assumed during the transaction's initial review. The loss multiples for each rating category took into consideration the remaining gross loss projections against the original pool balance.

Credit enhancement consists of excess spread, overcollateralization, and a reserve fund for the senior and subordinate notes and subordination for the senior and mezzanine notes. Fitch assumed excess spread to be the lesser of the average historical excess spread (earning on the assets minus interest payments to bondholders and fees) and the most recent 12-month average excess spread, and applied that same rate over the remaining life.

The private student loan collateral consists of private student loans that were originated either by TERI or LEARN underwriting guidelines by Liberty Bank, N.A. or Charter One Bank, N.A. Loan losses are guaranteed by a TERI guaranty for TERI originated loans and by the LEARN account for LEARN originated loans. The trust portfolio is comprised of 80.8% of LEARN loans and 19.2% of TERI loans.

Fitch has taken the following rating actions:

--Class A affirmed at 'AAA', Outlook Negative;

--Class B downgraded to 'A-' from 'A', Outlook Negative;

--Class C downgraded to 'BB-' from 'BBB', Outlook Negative.

Fitch has removed the above-referenced notes from Rating Watch Negative.

The following applicable criteria reports are available on Fitch's web site at www.fitchratings.com:

--'Global Structured Finance Rating Criteria' dated Sept. 30, 2009;

--'U.S. Private Student Loan ABS Criteria', dated Aug. 24, 2009.

Additional information is available at www.fitchratings.com.

Related Research:

U.S. Private Student Loan ABS Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=463174

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=469406

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.