Fitch Affirms Brazos Student Finance Corp. - 1998 Indenture Trust

NEW YORK--(BUSINESS WIRE)--Fitch Ratings affirms the senior note at 'AAA' and subordinate notes at 'A' issued by Brazos Student Finance Corp. - 1998 Indenture Trust. In addition, Fitch has assigned Stable Rating Outlooks to all of the notes.

The affirmations are based on sufficient level of enhancement in the trust, consisting of any combination of subordination, overcollateralization, and projected minimum excess spread to cover the applicable risk factor stresses. Although the trust total parity is reported to be at 112.25%, Fitch applied the release level parity of 102.00% for the analysis.

For the portion of the trust that is backed by private student loans, Fitch conducted a review of the collateral performance that involved the calculation of loss coverage multiples based on the most recent data. A projected net loss amount was compared to available credit enhancement to determine the loss multiples. Fitch used proxy historical vintage loss data to form a loss timing curve. After giving credit for seasoning of loans in repayment, Fitch applied the current cumulative gross loss level to this loss timing curve to derive the expected gross losses over the remaining life for each trust. A recovery rate was applied, which was determined to be appropriate based on the latest data provided by the issuer. In addition, Fitch assumed excess spread to be the lesser of the current annualized excess spread, the average historical excess spread, and the most recent 12-month average excess spread and applied that same rate over the remaining life.

The student loan collateral consists of both Federal Family Education Loan Program (FFELP) and private student loans. The private student loans include TERI, HEAL, TuitionGard, GATE and Resource loans. The TERI loan collateral is guaranteed by The Education Resources Institute (TERI). TERI filed for chapter 11 bankruptcy protection in April 2008. No credit was given to the possibility of TERI making any claim payments.

Fitch has affirmed and assigned Outlooks to the following classes:

Brazos Student Finance Corp- 1998 Indenture Trust:

--Series 1998 A-3 at 'AAA'; Outlook Stable;

--Series 1998 B-1 at 'A'; Outlook Stable;

--Series 2001 B-1 at 'A'; Outlook Stable.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Fitch to Gauge Basis Risk in Auction- Rate U.S. FFELP SLABS Review Applying Updated Criteria' dated Sept. 22, 2010;

--'Fitch to Begin Review of U.S. FFELP SLABS Applying Updated Criteria', dated June 29, 2010;

--'Global Structured Finance Rating Criteria', dated Aug. 16, 2010;

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

--'Rating U.S. Federal Family Education Loan Program Student Loan ABS', dated April 11, 2008.

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=547326

U.S. Private Student Loan ABS Criteria

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

Rating US Federal Family Education Loan Program Student Loan ABS Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=382306

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