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By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

 

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2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

 

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Rating Action:

MOODY'S ASSIGNED DEFINITIVE RATINGS TO NORTHSTAR 2005-1 TRANSACTION

28 Oct 2005
MOODY'S ASSIGNED DEFINITIVE RATINGS TO NORTHSTAR 2005-1 TRANSACTION

Approximately $1.0 Billion of Asset-Backed Securities Rated.

New York, October 28, 2005 -- Moody's Investors Service has assigned definitive ratings of Aaa to Student Loan Asset-Backed Notes, Senior Series 2005-1A-1 through 2005-1A-5, and the rating of A2 to Student Loan Asset-Backed Notes, Subordinate Series 2005-1B, issued by NorthStar Education Finance, Inc. ("NorthStar").

The complete ratings actions are as follows:

Issuer: NorthStar

$193,100,000 Floating Rate Student Loan Asset-Backed Notes, Senior Series 2005-1A-1, rated Aaa

$118,300,000 Floating Rate Student Loan Asset-Backed Notes, Senior Series 2005-1A-2, rated Aaa

$227,900,000 Floating Rate Student Loan Asset-Backed Notes, Senior Series 2005-1A-3, rated Aaa

$210,700,000 Floating Rate Student Loan Asset-Backed Notes, Senior Series 2005-1A-4, rated Aaa

$250,000,000 Reset Rate Student Loan Asset-Backed Notes, Senior Series 2005-1A-5, rated Aaa

$20,000,000 Auction Rate Student Loan Asset-Backed Notes, Senior Series 2005-1B, rated A2

RATING RATIONALE

The ratings of the notes are based on the quality of the collateral underlying the transaction which consists of Federal Family Education Loan Program ("FFELP") student loans, which are indirectly guaranteed for at least 98% of defaulted principal and accrued interest by the U.S. Department of Education ("DOE"); the availability of a debt service reserve account equal to 0.75% of the principal amount of the notes (with a minimum of $2,500,000) and a Capitalized Interest Fund which at closing equals $60 million, both of which enhance the transaction's liquidity; available excess spread; the experience and expertise of Great Lakes Educational Loan Services, Inc.(SQ1) as servicer; and the transaction's structure. In addition, the senior notes are supported by the 4% subordination of the subordinated notes. Subordination is expected to increase over time, as no subordinate notes may be redeemed so long as senior LIBOR notes and senior reset rate notes remain outstanding; and thereafter, if there are any senior ARS notes outstanding subject to rating agency confirmation.

FIFTH ISSUANCE UNDER TRUST INDENTURE

The Senior Series 2005-1A-1 through 2005-1A-5 and the Subordinate Series 2005-1B will be issued under the eighth supplement dated as of October 1, 2005 to the Trust Indenture originally dated as of November 1, 2000. The Series 2005-1 Notes are on parity with previously issued Series 2000, 2002, 2004-1 and 2004-2 Senior and subordinate notes, as applicable. All notes are supported by pledged assets, which consist of FFELP student loans and amounts on deposit in trust accounts.

TARGETED AMORTIZATION SCHEDULE FOR LIBOR RATE NOTES

The Senior Series 2005-1A-1 through 2005-1A-4 Notes will bear interest based on three-month LIBOR plus a margin. The Series 2005-1 LIBOR Notes have a targeted amortization schedule (starting July, 2010) with quarterly payments of interest beginning in January 30, 2006. If the amount available to distribute as principal on any quarterly distribution date is less than the scheduled principal amortization amount, it will not be considered an event of default. Any shortfall between the scheduled principal amortization amount and what is actually paid will be added to the principal amount scheduled to be paid on the next quarterly distribution date.

RESET RATE NOTES

The Senior Series 2005-1A-5 will be reset rate notes. The interest rate on the notes will be reset from time to time. The initial reset date is October 28, 2008. During the initial reset period the notes will bear interest at an annual rate of 4.74%. At the initial reset rate date, the notes will be remarketed and the terms of the notes may change; at the reset date, the currency, coupon and the maturity of the notes will be determined. Moody's has incorporated in its analysis the probability of failed remarketing.

During the initial reset period, and at any period at which the reset rate notes bear interest at a fixed rate, the notes will not receive principal payments until the end of the related reset period; instead, such principal payments will be deposited into the retirement account until the next reset date, at which the notes may be redeemed. While the notes bear interest at floating rate or an auction rate, the issuer may make principal distributions during any reset period.

AUCTION RATE NOTES CAPPED AT NET LOAN RATE

The Series 2005-1B Notes will bear interest based on auction rates determined by the auction procedures specified. For each auction period, the interest rate for the series 2005-1B Notes will be the least of: (a) the rate determined pursuant to the auction procedures specified in the transaction documents, (b) the Maximum Auction Rate, which is based on the 91-day US Treasury Bill rate for one-year period plus 1.50% (c) the sum of one-month LIBOR and 1.50%, (d) the Maximum Interest Rate, which is equal to the lesser of 18% and the higher rate permitted by law or (e) the Net Loan Rate, during the Net Loan Rate Period. The Series 2005-1B may also be redeemed on any auction rate distribution date, in whole or in part, at a price of par plus accrued interest. However, no subordinate notes, including the Series 2005-1B Notes, may be redeemed so long as senior LIBOR notes and senior reset rate notes remain outstanding, and thereafter, if there are any senior ARS notes outstanding only after a rating agency confirmation.

STRONG UNDERLYING COLLATERAL

At closing, the pool of student loans, in the amount of approximately $2.85 billion, consists of FFELP student loans, which are indirectly guaranteed for at least 98% of defaulted principal and accrued interest by the DOE. Approximately 60% of the loans (by principal balance) were identified as loans to students at medical schools, approximately 20% were identified as loans to students at Law/MBA schools, and the rest (about 20%) were made to students at other 4-year or graduate schools. Historically, loans to students at four-year colleges and graduate schools have had lower default rates than loans made to students attending two-year and proprietary schools.

ISSUER AND SERVICER

NorthStar is a Delaware non-stock nonprofit corporation incorporated in January 2000. NorthStar is recognized as exempt from federal income taxation under Section 501(c)(3) of the Internal Revenue Code. NorthStar was formed to carry on the student loan programs started by NorthStar Guarantee, Inc., a Minnesota nonprofit corporation recognized as exempt from federal income taxation under Section 501(c)(3) of the Internal Revenue Code. NorthStar Guarantee, Inc. was established in 1991 as the State of Minnesota's designated federal loan guarantor. NorthStar Guarantee, Inc. also provided loan origination services, loan escrow and loan disbursement services for lenders and educational institutions.

The student loans are serviced on behalf of NorthStar by Great Lakes Educational Loan Services, Inc. (rated SQ1 by Moody's) a Wisconsin corporation. Great Lakes primary business is to service student loans. Great Lakes was awarded the "Exceptional Performer" designation by the DOE. As a result, lenders serviced by Great Lakes are eligible to receive reimbursement on claims for defaulted loans based upon 100% of the unpaid principal balance plus accrued unpaid interest, rather than the statutorily set 98%.

For further information visit www.moodys.com

New York
Linda Stesney
Managing Director
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Giyora Eiger
Associate Analyst
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

No Related Data.
© 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

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MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY550,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​
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