Fitch Places Massachusetts Educational Financing Auth's Issue E Notes (2001 Trust) on Watch Negative

NEW YORK--()--Fitch Ratings places the Massachusetts Educational Financing Authority's (MEFA) Amended and Restated 2001 General Bond Resolution Educational Loan Revenue Bonds, Issue E on Rating Watch Negative.

The trust is comprised of collateral backed by private student loans and less than 1% Federal Family Education Loan Program (FFELP) Student Loan Notes.

As of the September 2012 report, the trust's loss coverage multiples do not support the current rating given higher than anticipated lifetime default projections. Fitch will conduct further analysis and expects to resolve the Rating Watch Negative within six months.

Credit enhancement consists of excess spread and overcollateralization. Fitch assumed excess spread to be the weighted average coupon on the loans less trust expenses and the maximum interest rate on the notes.

Although the notes are insured by AMBAC Assurance Corp. (Ambac), Fitch does not give credit to the insurance, as Fitch does not provide a rating for Ambac. The rating on the bonds is therefore based upon the collateral performance. After funds have been disbursed to satisfy the requirements under the flow of funds as stated in the General Resolution, the trust may release cash to the issuer if parity is greater than 103% and Ambac has approved of such a cash release. Currently, parity is reported to be 104.47%.

The trust's parity has fluctuated from 104.88% in September 2011 to 104.47% in September 2012.

Fitch places the following classes on Rating Watch Negative:

Massachusetts Educational Financing Authority's Amended and Restated 2001 General Bond Resolution Educational Loan Revenue Bonds, Issue E:

--Series 2001A 'AAsf'; Rating Watch Negative;

--Series 2002A 'AAsf'; Rating Watch Negative;

--Series 2002B 'AAsf'; Rating Watch Negative;

--Series 2002D 'AAsf'; Rating Watch Negative;

--Series 2002E 'AAsf'; Rating Watch Negative;

--Series 2003A 'AAsf'; Rating Watch Negative;

--Series 2003B 'AAsf'; Rating Watch Negative;

--Series 2003E 'AAsf'; Rating Watch Negative;

--Series 2004A 'AAsf'; Rating Watch Negative

--Series 2004B 'AAsf'; Rating Watch Negative;

--Series 2005A 'AAsf'; Rating Watch Negative;

--Series 2005B 'AAsf'; Rating Watch Negative;

--Series 2006A-1 'AAsf'; Rating Watch Negative;

--Series 2006A-2 'AAsf'; Rating Watch Negative;

--Series 2006C 'AAsf'; Rating Watch Negative;

--Series 2006D 'AAsf'; Rating Watch Negative;

--Series 2007A-1 'AAsf'; Rating Watch Negative;

--Series 2007A-2 'AAsf'; Rating Watch Negative;

--Series 2007A-3 'AAsf'; Rating Watch Negative

--Series 2007B 'AAsf'; Rating Watch Negative;

--Series 2007C 'AAsf'; Rating Watch Negative;

--Series 2007D 'AAsf'; Rating Watch Negative;

--Series 2007E 'AAsf'; Rating Watch Negative.

Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria,' Jun. 6, 2012;

--'U.S. Private Student Loan ABS Criteria,' Jan. 29, 2013;

--'Rating U.S. Federal Family Education Loan Program Student Loan ABS,' Apr. 3, 2012.

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679923

U.S. Private Student Loan ABS Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=698293

Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=675202

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Contacts

Fitch Ratings
Primary Analyst
Kinga Gorniak, +1-212-908-0792
Associate Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Committee Chairperson
Steven Stubbs, +1-212-908-0676
Senior Director
or
Media Relations
Sandro Scenga, +1 212-908-0278 (New York)
sandro.scenga@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst
Kinga Gorniak, +1-212-908-0792
Associate Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Committee Chairperson
Steven Stubbs, +1-212-908-0676
Senior Director
or
Media Relations
Sandro Scenga, +1 212-908-0278 (New York)
sandro.scenga@fitchratings.com