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Rating Action:

Moody's assigns Aaa/VMIG 1 rating to Series 2008 New Mexico Educational Assistance Foundation Education Loan Bonds

03 Jul 2008
Moody's assigns Aaa/VMIG 1 rating to Series 2008 New Mexico Educational Assistance Foundation Education Loan Bonds

Approximately $436 Million of debt affected

New York, July 03, 2008 -- Moody's Investors Service assigns a Aaa/VMIG 1 rating to the Series 2008A-1, 2008A-2, 2008A-3, 2008A-4 and 2008A-5 Bonds. The rating is based upon letters of credit provided by Bank of America N.A.(for the Series 2008A-1 and 2008A-4 Bonds), Royal Bank of Canada (for the Series 2008A-2 and 2008A-5 Bonds) and Lloyds TSB Bank plc (for the Series 2008A-3 Bonds); 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 Banks issuing the letters of credit. Furthermore, Moody's has assigned an underlying long-term rating of Aaa on the Series 2008 Bonds.

The complete rating actions are as follows:

Series 2008A-1, rated Aaa/VMIG 1

Series 2008A-2, rated Aaa/VMIG 1

Series 2008A-3, rated Aaa/VMIG 1

Series 2008A-4, rated Aaa/VMIG 1

Series 2008A-5, rated Aaa/VMIG 1

The Series 2008 Bonds also carry an underlying long-term rating of Aaa.

Moody's currently rates Bank of America N.A. Aaa/P-1 for their long-term and short-term debt. Moody's currently rates Royal Bank of Canada Aaa/P-1 for their long-term and short-term debt. Lloyds TSB Bank plc is currently rated Aaa/P-1 for their long-term and short-term debt as well.

INTEREST RATE MODES AND PAYMENT

The Bonds will bear interest in the weekly rate mode. Interest on Series 2008A-1, 2008A-2 and 2008A-3 Bonds is payable on September 1, 2008 and semiannually thereafter on each March 1 and September 1 until maturity or earlier redmeption. Interest on Series 2008A-4 and 2008A-5 Bonds is payable on the first business day of each month commencing July 1, 2008 until maturity or earlier redemption. The indenture permits conversion of the Bonds, in whole, to the daily rate mode, weekly rate mode, monthly rate mode, auction rate mode, fixed rate mode, indexed rate mode or term rate mode. The Bonds will be subject to mandatory tender on each mode change date. The rating applies to Bonds bearing interest in the weekly rate modes.

ADDITIONAL BONDS

The supplemental trust indentures do not permit the issuance of additional bonds.

FLOW OF FUNDS

The Trustee is instructed to draw under the applicable letter of credit in accordance with its terms in order to make timely payment of debt service on each interest payment date, redemption date or maturity date. The trustee is instructed to draw under the applicable letter of credit on each purchase date, for purchase price, to the extent remarketing proceeds received are insufficient. Bonds which are purchased by the Bank due to a failed remarketing will not be released for remarketing until the trustee has received written confirmation from the applicable Bank stating that the letter of credit has been fully reinstated.

LETTER OF CREDIT

The Bank of America N.A. letter of credit is sized for i) full principal plus 200 days' interest at the maximum rate (12%) applicable to the Series 2008A-1 Bonds and will provide coverage for the Series 2008A-1 Bonds while they bear interest in the weekly rate modes and ii) full principal plus 47 days' interest at the maximum rate (12%) applicable to the Series 2008A-4 Bonds and will provide coverage for the Series 2008A-4 Bonds while they bear interest in the weekly rate modes. The letter of credit is subject to International Standby Practice, International Chamber of Commerce Publication No. 590.

The Royal Bank of Canada letter of credit is sized for i) full principal plus 200 days' interest at the maximum rate (12%) applicable to the Series 2008A-2 Bonds and will provide coverage for the Series 2008A-2 Bonds while they bear interest in the weekly rate modes and ii) full principal plus 47 days' interest at the maximum rate (12%) applicable to the Series 2008A-5 Bonds and will provide coverage for the Series 2008A-5 Bonds while they bear interest in the weekly rate modes. The letter of credit is subject to International Standby Practice, International Chamber of Commerce Publication No. 590.

The Lloyds TSB Bank plc letter of credit is sized for full principal plus 200 days' interest at the maximum rate (12%) applicable to the Series 2008A-3 Bonds and will provide coverage for the Series 2008A-3 Bonds while they bear interest in the weekly rate modes. The letter of credit is subject to International Standby Practice, International Chamber of Commerce Publication No. 590

.

DRAWS ON THE LETTERS OF CREDIT

Conforming draws under the applicable letter of credit for principal and interest presented to the applicable Bank prior to 1:00 p.m. New York, New York Time, on a business day, will be honored by the applicable Bank no later than 12:00 p.m., New York, New York Time on the following business day. Conforming draws for purchase price presented to the applicable Bank prior to 10:30 a.m. New York, New York Time, on a business day, will be honored by sthe applicable Bank not later than 2:30 p.m. New York, New York Time on such business day.

REINSTATEMENT OF INTEREST DRAWS

The interest component under the Bank of America N.A. letter of credit shall automatically reinstate on the tenth calendar day following an interest drawing unless the trustee receives a notice of non-reinstatement of interest or a notice of event of default from the Bank. Upon receipt of such notice, the Series 2008A-1 Bonds and Series 2008A-4 Bonds will be subject to mandatory tender or acceleration upon receipt by the trustee of such notice.

The interest component under the Royal Bank of Canada letter of credit shall automatically reinstate on the tenth calendar day following an interest drawing unless the trustee receives a notice of non-reinstatement of interest or a notice of event of default from the Bank. Upon receipt of such notice, the Series 2008A-2 Bonds and Series 2008A-5 Bonds will be subject to mandatory tender or accleration upon receipt by the trustee of such notice.

The interest component under the Lloyds TSB Bank plc letter of credit shall automatically reinstate on the tenth calendar day following an interest drawing unless the trustee receives a notice of non-reinstatement of interest or a notice of event of default from the Bank. Upon receipt of such notice, the Series 2008A-3 Bonds will be subject to mandatory tender or acceleration upon receipt by the trustee of such notice.

REIMBURSEMENT AGREEMENT DEFAULTS

Each Bank may, at its option, send written notice to the trustee stating that an event of default under the reimbursement agreement has occurred and direct the trustee to tender or accelerate the Bonds. Upon Bank(s) direction to cause mandatory tender, the Bonds will be subject to mandatory tender on the business day after receipt by the trustee of such notice. Upon Bank(s) direction to cause acceleration, the Bonds will become immediately due and payable. Interest would cease to accrue upon date of declaration of acceleration.

EXPIRATION / TERMINATION OF THE LETTERS OF CREDIT

Each letter of credit will terminate upon the earliest to occur of (i) June 25, 2010, the stated expiration date; (ii) 10 days after the Bank has received a certificate stating that (a) no bonds remain outstanding, (b) the Bonds have converted to a rate mode other than the weekly rate mode, (c) a substitute letter of credit has been issued; (iii) 10 days after the trustee has received a notice stating that (a) event of default has happened and the Bonds are to be called for mandatory tender (b) event of default has happened and the Bonds are to be accelerated; and (iv) 10 days after the trustee has received a non-reinstatement notice.

SUBSTITUTION

The affected Series of Bonds will be subject to mandatory tender on the effective date of an alternate letter of credit for such Bonds. Draws for purchase price upon 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.

OPTIONAL TENDERS

While in the weekly rate mode, bondholders may optionally tender their Bonds on any business day with seven days prior written notice to the trustee.

MANDATORY PURCHASES

The Bonds are subject to mandatory tender on the following dates: (i) each mode change date; (ii) the seventh business days prior to the expiration date of the letter of credit; (iii) the business day following the trustee's receipt of notice stating (a) the occurrence of an event of default under the reimbursement agreement and direction to tender the Bonds or (b) the drawing under the letter of credit will not be reinstated; (iv) the letter of credit substitution date; (v) while in the weekly rate mode, a date specified by the borrower with consent of the applicable Bank; (vi) if a liquidity facility is in effect, the business day immediately preceding the date of termination of the liquidity facility; and (vii) for the Bonds in the term mode, the first business day following the last day of each term rate period.

MANDATORY REDEMPTIONS

The Series 2008A-1, 2008A-2 and 2008A-3 Bonds are subject to mandatory sinking fund redemption.

Underlying Rating

In addition, Moody's has assigned an underlying long term rating of Aaa on the Series 2008 Bonds. The Bonds are secured by trust estate assets, including a pool of Federal Family Education Loan Program(FFELP) loans, which are ultimately guaranteed by the U.S. Department of Education for a minimum of 97% of defaulted principal and accrued interest. Moody's assigned the underlying ratings based on the following factors: 1) the overcollateralization level; 2) the reserve account; 3) the capitalized interest account; 4) the high quality of underlying student loans that benefit from the DOE's guarantee.

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

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

No Related Data.
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