Moody's Investors Service has placed under review for possible downgrade the ratings of 93 notes in 12 National Collegiate Student Loan Trust transactions. The actions follow Monday's bankruptcy filing of The Education Resources Institute (TERI). Moody's downgraded TERI's rating on Tuesday to 'Ca' from 'B2.'
The primary servicer of the deals is Pennsylvania Higher Education
Assistance Agency (PHEAA), the rating agency noted. First Marblehead Education Resources, a subsidiary of First Marblehead Corp.,
assigns servicing responsibilities for loans delinquent more than sixty
days to collection agencies. The rating agency noted that TERI's bankruptcy could affect First Marblehead's ability to efficiently service the securitized loans. This might, in turn, negatively affect the default and recovery rates
on these loans.
In a release, Moody's noted that the underlying collateral in the transactions under review comprises private student loans that are originated under TERI's loan programs. The now bankrupt student loan company guarantees certain payment on the loans.
