$35 million of debt affected
New York, September 22, 2010 -- Moody's Investors Service has affirmed the rating of Aaa (sf)/VMIG 1 assigned
to the $35,000,000 State Board of Regents of the State
of Utah Student Loan Revenue Bonds, Series 1993A (the Bonds) in
conjunction with the substitution of the current letter of credit securing
the Bonds provided by Depfa Bank Plc with a letter of credit to be provided
by Royal Bank of Canada.
Upon substitution, the short-term ratings on the Bonds will
be based upon the letter of credit provided by Royal Bank of Canada (the
Bank); the structure and legal protections of the transaction,
which ensures timely payment of debt service and purchase price to bondholders;
and Moody's evaluation of the credit quality of the bank issuing the letter
Moody's currently rates Royal Bank of Canada, Aaa (under review
for downgrade) for its long-term obligations and Prime-1
for its short-term obligations.
Interest Rate Modes and Payment
The Bonds will continue to bear interest in a weekly rate mode and interest
will be paid on May 1 and November 1 of each year. The Bonds may
be converted, in whole, to an intermediate rate mode or a
fixed rate mode and are subject to mandatory tender upon conversion.
The rating covers Bonds in the weekly rate mode only.
The general indenture permits the issuance of additional bonds of a different
series and requires that such bonds be issued under a separate Supplemental
Indenture with separate accounts and credit facility, if any.
Flow of Funds
The trustee is instructed to draw under the letter of credit for principal
or interest on the business day preceding each interest payment date,
redemption date, maturity date and concurrently with any acceleration.
The trustee is instructed to draw under the letter of credit, by
3:00 p.m. New York time on the business day prior
to each purchase date, for purchase price, to the extent remarketing
proceeds are insufficient. Bonds which are purchased by the Bank
due to a failed remarketing are held by the trustee and will not be released
until the trustee has received written confirmation from the Bank stating
that the letter of credit has been reinstated in the amount of the purchase
price drawn for such Bonds.
Letter Of Credit
The letter of credit is sized for full principal plus two hundred and
twenty-five (225) days of interest at the maximum rate applicable
to the Bonds (12%) and will provide coverage for Bonds while they
bear interest in the weekly rate mode. The letter of credit provided
by the Bank is governed by the International Standby Practices 1998 (International
Chamber of Commerce Publication No. 590) (the ISP98).
Draws On the Letter Of Credit
Conforming draws for principal or interest presented to the Bank at or
before 3:00 p.m., New York time, on a
business day, will be honored by the Bank on or before 12:00
p.m. on the next business day. Conforming draws for
purchase price presented to the Bank at or before 12:00 noon.,
New York time, on a business day, will be honored by the Bank
on or before 3:00 p.m. on the same business day.
Reinstatement of Interest Draws
Draws made under the letter of credit for interest shall be automatically
reinstated on the eleventh day following the date of such drawing unless
the trustee receives prior written notice stating that an event of default
under the reimbursement agreement has occurred or that the letter of credit
will not be reinstated and in either case directing redemption of the
Bonds. Upon receipt of such notice, the Bonds will be subject
to mandatory redemption within 28 days in the case of the trustee's
receipt of notice of an event of default under the reimbursement agreement
and within 21 days in the case of the trustee's receipt of notice
Reimbursement Agreement Defaults
The Bank may at any time, send written notice to the trustee stating
that an event of default under the reimbursement agreement has occurred
and directing a mandatory redemption of the Bonds. Upon receipt
of such notice, the Bonds will be subject to mandatory redemption
no later than 28 days following the trustee's receipt of such notice.
The letter of credit will expire the earlier of (i) the Bank's honoring
of such a draw and (ii) the business day following the 28th day following
the trustee's receipt of notice from the Bank.
Events of Default Related to Payment Under the Indenture
The indenture contains events of default related to default in the payment
of the principal of or interest on any Bond or the purchase price of any
Bond as the same shall become due and payable. Upon the occurrence
of such an event of default, with the request of the owners of not
less than one hundred percent (100%) of the senior most class of
parity Bonds, the trustee shall proceed to declare the principal
amount of all Bonds outstanding together with accrued interest thereon
to be immediately due and payable.
Expiration / Termination of the Letter of Credit
The Letter of Credit will expire on the earliest to occur of: (i)
September 21, 2011, the stated expiration date of the letter
of credit, (ii) the date of the Bank's receipt of a certificate
from the trustee stating that either (a) no Bonds remain outstanding,
or (b) an effective alternate letter of credit has been issued to replace
the letter of credit in accordance with the indenture and accordingly
the letter of credit shall terminate upon the Bank's receipt of
such certificate, (iii) the earlier of (a) the business day immediately
following the Bank's receipt of a certificate from the trustee stating
that the Bonds have been converted to a rate mode other than the weekly
rate, and (b) the date on which the Bank honors a draw on or after
the related conversion date, (iv) the earlier of (a) the date on
which the Bank honors a draw in connection with the redemption of the
Bonds for an event of default under the reimbursement agreement and (b)
the business day following the date that is 28 days from the trustee's
receipt of notice from the Bank of an event of default under the reimbursement
agreement, and (v) the earlier of (a) the date on which the Bank
honors a draw in connection with the redemption of the Bonds for non-reinstatement
of the letter of credit and (b) the business day following the date that
is 21 days from the trustee's receipt of notice from the Bank of
non-reinstatement of the letter of credit.
The Bonds will be subject to mandatory tender on fifth business day prior
to the effective date of an alternate letter of credit. Draws for
purchase price upon the substitution of the letter of credit will be made
under the existing letter of credit and the existing letter of credit
will not be surrendered to the Bank for cancellation until such tender
draw has been honored.
Bondholders may optionally tender their Bonds during the weekly mode on
any business day with seven days prior written notice to the trustee.
The Bonds are subject to mandatory tender on the following dates:
(i) the fifth business day preceding the expiration or termination of
the letter of credit; (ii) the effective date of a substitute letter
of credit; and (iii) each conversion date.
The Bonds are subject to mandatory redemption (i) upon a determination
of taxability, (ii) no later than 28 days following trustee's
receipt of notice of event of default under the reimbursement agreement
and (iii) no later than 21 days following trustee's receipt of notice
that the Bank has not been reimbursed.
Remarketing Agent: RBC Capital Markets
Trustee: Wells Fargo Bank, N.A.
The principal methodology used in rating this issue was Moody's Rating
Methodology for Letter of Credit Supported Transactions, published
in August 2005 and available on www.moodys.com in the Rating
Methodologies sub-directory under the Research & Ratings tab.
Other methodologies and factors that may have been considered in the process
of rating this issue can also be found in the Rating Methodologies sub-directory
on Moody's website. In addition, Moody's publishes a weekly
summary of structured finance credit, ratings and methodologies,
available to all registered users of our website, at www.moodys.com/SFQuickCheck.
Information sources used to prepare the credit rating are the following:
parties involved in the ratings, parties not involved in the ratings,
public information, confidential and proprietary Moody's Investors
Service's information, confidential and proprietary Moody's
Moody's Investors Service considers the quality of information available
on the issuer or obligation satisfactory for the purpose of maintaining
a credit rating.
MOODY'S adopts all necessary measures so that the information it uses
in assigning a credit rating is of sufficient quality and from sources
MOODY'S considers to be reliable including, when appropriate,
independent third-party sources. However, MOODY'S
is not an auditor and cannot in every instance independently verify or
validate information received in the rating process.
Please see ratings tab on the issuer/entity page on Moodys.com
for the last rating action and the rating history.
The date on which some Credit Ratings were first released goes back to
a time before Moody's Investors Service's Credit Ratings were fully digitized
and accurate data may not be available. Consequently, Moody's
Investors Service provides a date that it believes is the most reliable
and accurate based on the information that is available to it.
Please see the ratings disclosure page on our website www.moodys.com
for further information.
Please see the Credit Policy page on Moodys.com for the methodologies
used in determining ratings, further information on the meaning
of each rating category and the definition of default and recovery.
MD - Structured Finance
Structured Finance Group
Moody's Investors Service
Pedro Sancholuz Ruda
Structured Finance Group
Moody's Investors Service
Moody's Investors Service
Moody's affirms Aaa (sf)/VMIG 1 rating assigned to State Board of Regents of the State of Utah Student Loan Revenue Bonds, Series 1993A
250 Greenwich Street
New York, NY 10007