New York, December 28, 2010 -- On August 2, 2010, Moody's began applying an "(sf)"
indicator to its new and existing ratings of structured finance instruments.
Moody's has determined that the (sf) indicator should not apply
to student loan backed bonds issued by a non-profit or public instrumentality
that issues fewer than three classes of debt. As a result,
the "sf" indicator is being removed from the outstanding instruments
of the deals listed at the end of this update.
This press release also provides a more detailed list of instruments to
which Moody's applies the (sf) indicator (the original list was
included in the July 14, 2010 press release titled "Moody's
Plans to Publish Structured Finance Ratings Indicator").
The (sf) indicator will be used to satisfy the requirements under the
European Regulation on Credit Rating Agencies (the "EU Regulation").
In addition, instruments with the (sf) indicator are the type that
Moody's believes to be "structured finance instruments"
within the meaning of the U.S. Securities and Exchange Commission's
Rule 17g-5(a)(3) and (b)(9) ("Amended Rule").
While in most cases Moody's application of the (sf) indicator to
an instrument means that Moody's is applying the Amended Rule to
that instrument, there may be instances where an instrument with
an (sf) indicator will not be subject to the Amended Rule. This
is because the Amended Rule applies only to Moody's ratings of structured
finance instruments where, among other things, Moody's
initiated the rating process on or after June 2, 2010 and cannot
rely upon a temporary exemption that the SEC has granted in respect of
ratings on structured finance instruments that are issued by non-U.S.
persons and offered and sold outside the U.S.
While subject to change, the following is a current list of the
key types of instruments to which Moody's applies the (sf) indicator:
1. Asset backed commercial paper (ABCP)
2. Asset backed securities (ABS)
3. Agency MBS excluding agency MBS backed transactions issued by
U.S. state and local housing finance agencies
4. Closed-end fund debt or preferred equity of funds that
materially invest in structured finance instruments
5. Closed-end fund debt or preferred equity of funds that
issue three or more classes of debt
6. Collateralized debt obligations (CDOs)
7. Commercial mortgage backed securities (CMBS)
8. Credit linked notes, repackaged securities, or structured
notes of one or more structured finance instruments or with credit tranching
9. Future flow financings
10. Principal protected notes secured by one or more structured
finance instruments even if the promise is not based on structured finance
instruments
11. Residential mortgage backed securities (RMBS)
12. Structured investment vehicle (SIV) instruments
13. Student Loan Backed Bonds issued by a non-profit or
public instrumentality that issue three or more classes of debt
14. U.S. state and local housing finance agencies
that issue three or more classes of debt
15. Variable Promise Notes issued on or after August 2, 2010
with non standard sources of variation
16. Whole business securitizations (e.g., instruments
backed by restaurant franchise royalties and pub securitizations,
etc.)
While subject to change, the following are among the instruments
or ratings to which Moody's currently does not apply the (sf) indicator:
1. Closed-end fund debt or preferred equity of funds that
do not materially invest in structured finance instruments
2. Closed-end fund debt or preferred equity of funds that
issue fewer than three classes of debt
3. Covered bonds
4. Credit linked notes, repackaged securities or structured
notes of non-structured finance instruments without credit tranching
5. Credit Tenant Leases with a single beneficial interest in the
trust
6. Derivative product company (DPC) ratings
7. Enhanced equipment trust certificates (EETCs)
8. Government enterprises instruments (e.g.,
instruments of water & sewer authorities, airports, power
authorities, U.S. state and local housing finance
agencies that issue fewer than three classes of debt, toll road
authorities, etc.)
9. Interest only and principal only strips and other pro-rata
slices of non structured finance instruments
10. Money market and bond fund ratings
11. Pass through financings of non-structured finance instruments
issuing a single interest (e.g., a pass through of
5 corporate bonds)
12. Project and corporate infrastructure financings (e.g.,
instruments for which the primary source of repayment is revenue generated
from the operation of infrastructure assets such as power plants,
chemical processing plants, mines, energy, transportation,
environment, telecommunications infrastructure, housing projects,
etc.)
13. Student loan backed bonds issued by a non-profit or
public instrumentality that issues fewer than three classes of debt
Moody's underlying rationale for applying the indicator, established
after internal reviews as well as discussions with market participants,
is based on the definition of "structured finance instrument"
in the EU Regulation, the description of "structured finance"
contained in the Amended Rule, and other similar concepts in other
legislation and international principles such as Basel II (hereinafter
collectively referred to as the "Regulations").
Moody's sought to define "structured finance instrument" as
objectively as possible. Our definition is not tied to our ratings
criteria, but rather is based on specific language in the Regulations.
For instruments that were difficult to categorize we also considered general
market practice.
In general, the key principles that we use for determining whether
an instrument is included as a structured finance instrument include:
? Payments depend upon the performance of an exposure/pool of exposures.
? The existence of a special purpose entity and whether economic
interests are transferred to such special purpose entity.
? The instruments are not obligations of or full or substantially
full recourse to the originator/sponsor.
? The presence of securitization tranching. We further interpret
"tranching" as contemplated in paragraph 539 of Basel II dealing
with traditional securitizations: "The stratified/tranched
structures that characterize securitizations differ from ordinary senior/subordinated
debt instruments in that junior securitization tranches can absorb losses
without interrupting contractual payments to more senior tranches,
whereas subordination in a senior/subordinated debt structure is a matter
of priority of rights to the proceeds of liquidation".
? The presence of a guarantee or insurance policy either covering
losses on the underlying assets or issued bonds typically would not impact
the categorization of whether an instrument is a structured finance instrument.
As a result of the many factors that Moody's considers in its definition
of a 'structured finance instrument", Moody's
may apply the (sf) indicator to some instruments that market participants
may not have considered to be structured finance instruments. Conversely,
the indicator may not be applied to securities that some market participants
may consider to be structured finance instruments.
The "sf" indicator is being removed from the outstanding instruments
of the deals listed below:
Academic Finance Corporation (2005 Indenture)
Access Group Inc. - Federal Student Loan Asset-Backed
Floating Rate Notes, Series 2005-2
Access Group Inc. Federal Student Loan Asset-Backed Notes,
(2002 Trust Indenture)
Access Group Inc. Private Student Loan asset-Backed Floating
Rate Notes, Series 2005-B
Access Group Inc., Series 2006-1
Access Group, Inc. Federal Student Loan Asset-Backed
Floating Rate Notes, Series 2005-1
Access Group, Inc. Private Student Loan Asset-Backed
Floating Rate Notes, Series 2007-A
Access Group, Inc. Series 2002-A
Access Group, Inc. Series 2004-2
Access Group, Inc. Series 2007-1
Access Group, Inc. Series 2008-1
Access Group, Inc., Federal Student Loan Asset-Backed
Notes, Series 2001
Access Group, Inc., Federal Student Loan Asset-Backed
Notes, Series 2001
Access Group, Inc., Private Student Loan Asset-Backed
Floating Rate Notes, Series 2005-A
Access Group, Inc., Private Student Loan Asset-Backed
Notes, Series 2004-A
Access Group, Inc., Series 2003-A
Alabama Higher Education Loan Corporation (2006 Indenture)
Alaska Student Loan Corporation (Capital Project Revenue Bonds -
2004 Indenture)
ALL Student Loan Corporation (2010 Indenture)
All Student Loan Corporation, 2005 Indenture (formerly Access to
Loans for Learning Corporation, 2005 Indenture)
All Student Loan Corporation, Series II (formerly Access to Loans
For Learning Corporation)
All Student Loan Corporation, Series IV (formerly Access to Loans
for Learning Corporation, Series IV)
Arkansas Student Loan Authority (1994 Indenture)
Arkansas Student Loan Authority (2010 Indenture)
Brazos Higher Ed. Authority, Inc. (1993B Indenture)
Brazos Higher Education Authority, Inc. ( 1993 Indenture
AC)
Brazos Higher Education Authority, Inc. (1992 Indenture C)
Brazos Higher Education Authority, Inc. (1999 Indenture)
Brazos Higher Education Authority, Inc. (2004 Indenture)
Brazos Student Finance Corp AB Certs 1995 Indenture
Brazos Student Finance Corporation (April 1, 2003 Indenture)
Brazos Student Finance Corporation (August 1, 2003 Indenture)
Brazos Student Finance Corporation AB Notes 1998 (new trust indenture)
Brazos Student Finance Corporation AB Notes 1999 (New Trust Indenture
- First Issuance)
Brazos Student Finance Corporation, Amended and restated 2004 Indenture
Brazos Student Finance Corporation, Series 2009-1
Brazos Student Finance Corporation, Series 2010-1
Central Texas Higher Ed. Authority, Inc. (1993 Indenture)
CollegeInvest - formerly Colorado Student Obligation Bond Authority
(1993 indenture)
CollegeInvest - formerly Colorado Student Obligation Bond Authority
(1999 indenture)
Connecticut Higher Education Supplement Loan Authority (1990 Indenture)
Connecticut Higher Education Supplemental Loan Authority (2003 Indenture)
Edinvest Company (2003 Indenture)
EduCap Inc. (2004 Indenture)
Education Services Foundation 1996-01
Educational Funding of the South, Inc. (1993 Indenture)
Educational Funding of the South, Inc. (2003 Indenture)
Educational Funding of the South, Inc. (2004 Indenture)
EFSI (2003 Indenture)
EFSI-CA - 2005 Indenture
Federated Student Finance Corporation (Amended and Restated Indenture
dated August 1, 2010)
Finance Authority of Maine (FAME - 2003 Indenture)
Greater East Texas Higher Education Authority (1992 Indenture)
Greater East Texas Higher Education Authority (1995 Indenture)
Greater East Texas Higher Education Authority, Inc. (May
1, 1993 Indenture)
Greater Texas Student Loan Corporation, Student Loan Revenue Bonds,
1998A, $35MM
Greater Texas Student Loan Corporation, Student Loan Revenue Bonds,
2000A, B(Taxable)
Higher Education Student Assistance Authority ( State of New Jersey -
2008 Indenture)
Higher Education Student Assistance Authority (State of New Jersey) Student
Loan Revenue Bonds, Series 2010-2
Higher Education Student Assistant Authority (State of New Jersey) Student
Loan Revenue Bonds, Series 2010-1
Illinois Student Assistance Commission (2002 Indenture)
Iowa Student Loan Liquidity Corporation (1993 Indenture)
Iowa Student Loan Liquidity Corporation (1995 Indenture)
Iowa Student Loan Liquidity Corporation (2005 Indenture)
Iowa Student Loan Liquidity Corporation (2006 Indenture)
Iowa Student Loan Liquidity Corporation (2009 Indenture)
Iowa Student Loan Liquidity Corporation, 1997
Kentucky Higher Education Student Loan Rev Bonds - 1997
KnowledgeFunding Ohio, Inc. (2005 Indenture)
Knowledgeworks Foundation Student Loan Backed Bonds, Series 2010
Louisiana Public Facilities Authority (1999 Indenture)
Massachusetts Educational Financing Authority - Issue E (1992 Indenture)
Massachusetts Educational Financing Authority - Issue H (2008 Indenture)
Massachusetts Educational Financing Authority (2008 Indenture)
Michigan Higher Education Student Loan Authority (2007 Indenture)
Michigan Higher Education Student Loan Authority (Series XII)
Michigan Higher Education Student Loan Authority (Series XVII)
Minnesota Office of Higher Education (formerly Minnesota Higher Education
Service Office - 1999 Indenture)
Minnesota Office of Higher Education, Supplemental Student Loan
Program Revenue Bonds 2008 Series A (Taxable) and Series B (Tax-Exempt),
$100MM
Mississippi Higher Education Assistance Corporation (1993 Indenture)
Mississippi Higher Education Assistance Corporation (1999 Indenture)
Mississippi Higher Education Assistance Corporation (2004 Indenture)
Missouri Higher Education Loan Authority (1988 Indenture)
Missouri Higher Education Loan Authority (1994 Indenture)
Missouri Higher Education Loan Authority (1995 Indenture)
Missouri Higher Education Loan Authority (2005 Indenture)
Montana Higher Education Student Assistance Corporation (1993 Indenture)
New Hampshire Higher Education Loan Corporation/New Hampshire Health and
Education Facilities Authority (1997 Indenture)
New Mexico Education Assistance Foundation (2008 Indenture)
New Mexico Educational Assistance Foundation - Education Loan Bonds
(2010 Indenture)
New Mexico Educational Assistance Foundation (1998 Indenture)
North Carolina State Education Assistance Authority - Tax-Exempt
Student Loan Revenue and Refunding Bonds, 2008-2 Series
North Carolina State Education Assistance Authority (1995 Indenture)
North Carolina State Education Assistance Authority (2005 Indenture)
North Dakota Student Loan Revenue Bonds, Series 1998A and 1998B
North Texas Higher Education Authority, Inc. ( 1987 Indenture)
North Texas Higher Education Authority, Inc. (1991-1
Indenture)
North Texas Higher Education Authority, Inc. (1991-2
Indenture)
North Texas Higher Education Authority, Inc. (1993 Indenture)
North Texas Higher Education Authority, Inc. (2008 Indenture)
NorthStar Education Finance, Inc. (2006 Indenture)
NorthStar Education Finance, Inc. (formerly NorthStar Guarantee
Inc., Division B 2000 Indenture)
Oklahoma Student Loan Authority - Senior Variable Rate Demand Obligations,
Series 2008IIA-1
Oklahoma Student Loan Authority (1995 Indenture)
Oklahoma Student Loan Authority Oklahoma Student Loan Bonds and Notes
Variable Rate Demand Obligations (1996 Indenture)
Panhandle - Plains Higher Education Authority, Inc.
(1991 Indenture, Restated 2006)
Panhandle-Plains Higher Education Authority Inc (1993 Indenture)
Panhandle-Plains Higher Education Authority, Inc.
- 1993 Restated 2000 Indenture
Panhandle-Plains Student Finance Corporation (2001 Indenture)
Pennsylvania Higher Education Assistance Agency (1997 Indenture)
Pennsylvania Higher Education Assistance Agency (2005 Indenture)
Pennsylvania Higher Education Assistance Agency (2006-1 Indenture)
Pennsylvania Higher Education Assistance Agency (2006-2 Indenture)
Rhode Island Student Loan Authority (1993 Indenture)
Rhode Island Student Loan Authority (1997 Indenture)
Rhode Island Student Loan Authority (2004 Indenture)
Rhode Island Student Loan Authority, RI, Student Loan Program
Revenue Bonds, Series 2008B-1 through Series 2008B-5
(Taxable),
South Carolina State Education Assistance Authority (2002 Indenture)
South Carolina Student Loan Corporation (1996 Indenture)
South Carolina Student Loan Corporation (2004 Indenture)
South Carolina Student Loan Corporation (2008 Indenture)
South Texas Higher Education Authority, Inc. (1997 Indenture)
South Texas Higher Education Authority, Inc. (2007 Indenture)
State Board of Regents of the State of Utah (1993 Indenture)
State of North Carolina State Education Assistance Authority, Tax-Exempt
Student Loan Revenue and Refunding Bonds, Series 2008-3 A1
and Series 2008-3 A2
State of North Carolina State Education Assistance Authority, Tax-Exempt
Student Loan Revenue and Refunding Bonds, Series 2008-5
State of Ohio Student Loan Revenue Bonds (2001 Indenture - Ohio
Centric Student Loan Program)
Teri Financial Services, Inc. Series 1999A and 1999B ( 1999
Indenture first issuance)
Trinity Higher Education Authority, Inc. (2004 Indenture)
Utah State Board of Regents (1988 Indenture)
Vermont Student Assistance Corporation ( 2008B Indenture)
Vermont Student Assistance Corporation (1995 Indenture)
Vermont Student Assistance Corporation (2008C Indenture)
New York
Kristen Setevage
Associate Analyst
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
New York
Yuri Yoshizawa
MD - Global Structured Credit
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's Investors Service
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
MOODY'S UPDATES LIST OF RATINGS RECEIVING THE (sf) INDICATOR