Fitch Rts Chela Financial USA's Student Loan ABS Nts

Business Wire, August 29, 2002

Business Editors

NEW YORK--(BUSINESS WIRE)--Aug. 29, 2002

Fitch rates the following Student Loan Asset-Backed Notes issued by Chela Financial USA, Inc.:

Ratings for new issuance:

--$75,000,000 Senior 2002 Series E-1 Notes, 'AAA';

--$75,000,000 Senior 2002 Series E-2 Notes, 'AAA';

--$75,000,000 Senior 2002 Series E-3 Notes, 'AAA';

--$75,000,000 Senior 2002 Series E-4 Notes, 'AAA';

--$75,000,000 Senior 2002 Series E-5 Notes, 'AAA';

--$75,000,000 Senior 2002 Series E-6 Notes, 'AAA';

--$75,000,000 Senior 2002 Series E-7 Notes, 'AAA';

--$75,000,000 Senior 2002 Series E-8 Notes, 'AAA';

--$75,000,000 Senior 2002 Series E-9 Notes, 'AAA';

--$75,000,000 Junior-Senior 2002 Series F Notes, 'A';

Ratings affirmed on existing debt:

--$25,000,000 Senior 1996 Series A Bonds, 'AAA';

--$30,000,000 Senior 1996 Series B-1 Bonds, 'AAA';

--$30,000,000 Senior 1996 Series B-2 Bonds, 'AAA';

--$30,000,000 Senior 1996 Series B-3 Bonds, 'AAA';

--$30,000,000 Senior 1996 Series B-4 Bonds, 'AAA';

--$20,000,000 Junior-Senior 1996 Series C Bonds, 'A';

--$58,000,000 Senior 1998 Series C-1 Bonds, 'AAA';

--$58,000,000 Senior 1998 Series C-2 Bonds, 'AAA';

--$59,000,000 Senior 1998 Series C-3 Bonds, 'AAA';

--$70,000,000 Senior 1998 Series C-4 Bonds, 'AAA';

--$70,000,000 Senior 1998 Series C-5 Bonds, 'AAA';

--$35,000,000 Junior-Senior 1998 Series D Bonds, 'A';

The ratings are based on the quality of the student loan portfolio; the reserve fund sized at the sum of 2% of the series 1996 A, B and C bonds, 1.5% of the series 1998 C and D bonds, and 0.50% of the series E and F notes, with a $500,000 minimum; the ability of the transaction to pass cash flows tests at each rating level; and the sound legal structure. In addition, the ratings on the Senior Bonds are based on the 10.28% subordination provided by the Subordinate Bonds.

The ratings reflect the ability of the trust estate to redeem the bonds and notes at maturity and pay timely interest. The ratings do not address any carryover amounts that may accrue on the bonds or notes nor do they address the ability of auction bondholders or noteholders to redeem their bonds at an auction now or in the future.

The Series E and F Notes are issued pursuant to the fourth supplemental indenture dated Aug. 1, 2002 to an amended and restated indenture of trusted dated as of Nov. 1, 1996.

The taxable senior series E-1 through E-7 and Junior-Senior series F notes are 28-Day Auction Rate Notes, with interest paid on the first business day following each auction period, subject to the an available funds cap. The taxable senior series E-8 and E-9 notes are 28-Day Auction Rate Certificates, with interest paid on the first business day following each auction period, and are not subject to an interest rate cap. The legal final maturity for the senior series E and Junior-Senior series F notes is Dec. 1, 2037.

A majority of the collateral securing the bonds are loans originated under the Federal Family Education Loan Program (FFELP). The loans are guaranteed at either 100% or 98% of principal and accrued interest by an eligible guarantor(s), depending on loan origination date, and reinsured by the U.S. Department of Education up to the same amounts. Up to 12% of the principal amount of bonds outstanding may be alternative loans, composed of TERI guaranteed loans, and self-insured credit worthy and credit ready loans. The self-insured credit-worthy and credit-ready loans are limited to 7% of the principal amount of bonds outstanding, with a 2% limit on the credit-ready loans. Currently there are approximately 7% alternative loans in the trust.

The student loans pledged under the indenture will be serviced by AFSA Data Corp., Nelnet Loan Services, Inc., Great Lakes Higher Education Servicing Corp., SERVUS Corp. and Sallie Mae Servicing L.P.

Incorporated in May 1994, Chela Financial USA (Chela USA), Inc. is a California nonprofit public benefit corporation. Organized as a 501(c)3 under the IRS code, Chela USA's purpose is to provide educational loan assistance, origination, referral, and servicing programs.

Merrill Lynch & Co. served as lead underwriter on this transaction.