Moody's downgrades and places on review for possible downgrade Access to Loans for Learning Student Loan Corporation Series IV student loan revenue bonds
Approximately $1 billion of asset-backed securities affected
New York, December 08, 2008 -- Moody's Investors Service has downgraded two tranches of subordinate
notes and placed on review for possible downgrade 16 tranches of senior
notes from All Student Loan Corporation, Series IV (formerly Access
to Loans for Learning Corporation, Series IV). The senior
notes were originally rated "Aaa" and the subordinate notes
were originally rated "A2".
The ratings on the notes were assigned by evaluating factors determined
to be applicable to the credit profile of the notes, such as i)
the nature, sufficiency, and quality of historical performance
information regarding the asset class as well as for the transaction sponsor,
ii) an analysis of the collateral being securitized, iii) an analysis
of the transaction's allocation of collateral cashflow and capital structure,
and (iv) a comparison of these attributes against those of other similar
transactions.
The actions were prompted by the increase in funding cost due to the prolonged
and continuing dislocations in the Student Loan Auction Rate Securities
(SLARS) market. As most student loan collateral is indexed to the
Financial Commercial Paper, LIBOR, or Prime rates, trusts
that have issued SLARS have suffered excess spread compression as the
yield on the assets has not increased in tandem with the cost of the liabilities.
In most structures, excess spread is a primary source of credit
enhancement.
As the auction rate market remains under stress and auctions continue
to fail, the ability of the trusts that have issued SLARS to accumulate
credit enhancement has been negatively impacted.
In case of All Student Loan Corporation, Series IV (formerly Access
to Loans for Learning Corporation, Series IV), as of September
30, 2008, approximately 74% of the trust's liabilities
were funded by auction rate notes and the parity at the senior subordinate
note level (the ratio of total assets to total senior and subordinate
liabilities) was 100.06%. At the failed auction,
the trust is expected to generate negative excess spread. Due to
the trust's inability to maintain collateralization with excess
spread, absent a restructuring of the trust liabilities, it
is unlikely that the subordinate notes will be paid off in full by the
legal maturity.
The senior parity (the ratio of total assets to total senior liabilities)
was 104.2% as of September 30, 2008. The senior
bonds were placed on review for possible downgrade as the total credit
enhancement available may not be sufficient to support the current rating
of the senior bonds.
Other methodologies and factors that may have been considered in the process
of rating this issue can also be found at www.moodys.com
in the Credit Policy & Methodologies directory.
The complete rating actions are as follows:
Issuer: All Student Loan Corporation, Series IV (formerly
Access to Loans for Learning Corporation, Series IV)
Student Loan Program Revenue Bonds, Senior Series IV-A-3,
current rating Aaa, Placed under Review for Possible Downgrade;
previously on 7/13/2000 Assigned Aaa;
Student Loan Program Revenue Bonds, Senior Series IV-A-4,
current rating Aaa, Placed under Review for Possible Downgrade;
previously on 7/12/2002 Assigned Aaa;
Student Loan Program Revenue Bonds, Senior Series IV-A-5,
current rating Aaa, Placed under Review for Possible Downgrade;
previously on 7/12/2002 Assigned Aaa;
Student Loan Program Revenue Bonds, Senior Series IV-A-6,
current rating Aaa, Placed under Review for Possible Downgrade;
previously on 2/3/2003 Assigned Aaa;
Student Loan Program Revenue Bonds, Senior Series IV-A-7,
current rating Aaa, Placed under Review for Possible Downgrade;
previously on 2/3/2003 Assigned Aaa;
Student Loan Program Revenue Bonds, Senior Series IV-A-8,
current rating Aaa, Placed under Review for Possible Downgrade;
previously on 2/3/2003 Assigned Aaa;
Student Loan Program Revenue Bonds, Senior Series IV-A-9,
current rating Aaa, Placed under Review for Possible Downgrade;
previously on 2/3/2003 Assigned Aaa;
Student Loan Program Revenue Bonds, Senior Series IV-A-10,
current rating Aaa, Placed under Review for Possible Downgrade;
previously on 2/3/2003 Assigned Aaa;
Student Loan Program Revenue Bonds, Senior Series IV-A-11,
current rating Aaa, Placed under Review for Possible Downgrade;
previously on 6/13/2003 Assigned Aaa;
Student Loan Program Revenue Bonds, Senior Series IV-A-12,
current rating Aaa, Placed under Review for Possible Downgrade;
previously on 6/13/2003 Assigned Aaa;
Student Loan Program Revenue Bonds, Senior Series IV-A-13,
current rating Aaa, Placed under Review for Possible Downgrade;
previously on 10/29/2004 Assigned Aaa;
Student Loan Program Revenue Bonds, Senior Series IV-A-14,
current rating Aaa, Placed under Review for Possible Downgrade;
previously on 10/19/2007 Assigned Aaa;
Student Loan Program Revenue Bonds, Senior Series IV-A-15,
current rating Aaa, Placed under Review for Possible Downgrade;
previously on 10/19/2007 Assigned Aaa;
Student Loan Program Revenue Bonds, Senior Series IV-A-16,
current rating Aaa, Placed under Review for Possible Downgrade;
previously on 10/19/2007 Assigned Aaa;
Student Loan Program Revenue Bonds, Senior Series IV-A-17,
current rating Aaa, Placed under Review for Possible Downgrade;
previously on 10/19/2007 Assigned Aaa;
Student Loan Program Revenue Bonds, Senior Series IV-A-18,
current rating Aaa, Placed under Review for Possible Downgrade;
previously on 10/19/2007 Assigned Aaa;
Student Loan Program Revenue Bonds, Subordinate Series IV-C-1,
Downgraded to Caa1 from A2; previously on 8/27/2008 Placed under
Review for Possible Downgrade;
Student Loan Program Revenue Bonds, Subordinate Series IV-C-2,
Downgraded to Caa1 from A2; previously on 8/27/2008 Placed under
Review for Possible Downgrade.
For more information please see www. Moodys.com
New York
Navneet Agarwal
VP - Senior Credit Officer
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
New York
JingJing Dang
Associate Analyst
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653