Fitch Affs 27, Upgrs 4 & Places 1 Class on Watch Negative in 5 KeyCorp Student Loan Trans

Business Wire, Nov 16, 2007

NEW YORK -- Fitch Ratings recently conducted a review of the KeyCorp student loan trusts that finance both FFELP (Federal Family Education Loan Program) and private student loans in two separate groups, with cross-collateralization of the groups occurring at the residual. For all KeyCorp Student Loan Trusts (KSLTs) using this two-group structure, group I finances 100% FFELP student loans, while group II finances 100% private student loans, with the majority of the loans having been originated by KeyBank, N.A. As a result of the review, Fitch has affirmed 27 classes, upgraded 4 classes, and placed 1 class on Rating Watch Negative of the following asset-backed notes issued by KeyCorp:

KSLT 2006-A Group I

--Class I-A-1 affirmed at 'AAA';

--Class I-A-2 affirmed at 'AAA';

--Class I-B affirmed at 'A'.

KSLT 2006-A Group II

--Class II-A-1 affirmed at 'AAA';

--Class II-A-2 affirmed at 'AAA';

--Class II-A-3 affirmed at 'AAA';

--Class II-A-4 affirmed at 'AAA';

--Class II-B affirmed at 'A';

--Class II-C affirmed at 'BBB'.

KSLT 2005-A Group I

--Class I-A-1 affirmed at 'AAA';

--Class I-A-2 affirmed at 'AAA';

--Class I-B upgraded to 'AAA' from 'AA'.

KSLT 2005-A Group II

--Class II-A-1 affirmed at 'AAA';

--Class II-A-2 affirmed at 'AAA';

--Class II-A-3 affirmed at 'AAA';

--Class II-A-4 affirmed at 'AAA';

--Class II-B affirmed at 'A';

--Class II-C affirmed at 'BBB'.

KSLT 2004-A Group I

--Class I-A-1 affirmed at 'AAA';

--Class I-A-2 affirmed at 'AAA';

--Class I-B upgraded to 'AAA' from 'AA'.

KSLT 2004-A Group II

--Class II-A-1 affirmed at 'AAA';;

--Class II-A-2 affirmed at 'AAA'

--Class II-B affirmed at 'AA';

--Class II-C affirmed at 'A';

--Class II-D 'BBB' placed on Rating Watch Negative.

KSLT 2002-A Group I

--Class I-A-2 affirmed at 'AAA';

--Class I-B upgraded to 'AAA' from 'A'.

KSLT 2002-A Group II

--Class II-A-2 affirmed at 'AAA'

KSLT 2001-A Group I

--Class I-A-2 affirmed at 'AAA';

--Class I-B upgraded to 'AAA' from 'A'.

KSLT 2001-A Group II

--Class II-A-2 affirmed at 'AAA'.

Credit enhancement for each group consists of excess spread, overcollateralization, subordination for the higher rated notes, and a cash capitalization account. The group I and group II reserve accounts are sized at 0.25% and 3.50% (3.00% for the KSLT 2001-A and 2002-A trusts) of the outstanding student loan principal balance. In addition, the KSLT 2001-A and 2002-A group II notes also benefit from financial guaranties provided by MBIA (Fitch Insurer Financial Strength Rating 'AAA') and Ambac (Fitch Insurer Financial Strength Rating 'AAA'), respectively.

Affirmations on the group I notes are based upon the collateral performance being consistent or better than Fitch's expectations from a net loss perspective. In addition, the affirmations and upgrades for certain class I-B notes are based on the credit enhancement within the trust, the high quality of the FFELP collateral, and the sound legal structure.

In the case of the KSLT 2001-A and 2002-A issuances, the group I notes are performing better than Fitch's expectations, resulting in an affirmation of the class I-A notes and an upgrade to the class I-B notes in each trust. The affirmations on the group II notes in these trusts are based on the financial guaranties provided by MBIA and Ambac, respectively. The collateral performance of the group II private student loan collateral has been consistent with Fitch's expectations from a net loss perspective. For both transactions, each group has reached its requisite release requirements, with excess spread released to the depositor. As such, the parity ratios have increased as follows for each trust (all parity ratios are calculated using all assets as reported in the trust estate):

--KSLT 2001-A group I parity ratio has increased from 97.92% to 100.46%;

--KSLT 2001-A group II parity ratio has increased from 101.77% to 103.11%.

--KSLT 2002-A group I parity ratio has increased from 96.95% to 100.37%;

--KSLT 2002-A group II parity ratio has increased from 102.47% to 103.10%

In the case of the KSLT 2004-A issuance, the group I notes are performing better than Fitch's expectations, resulting in an affirmation of the class I-A notes and an upgrade to the class I-B notes. The group I notes have reached the requisite parity ratios to release excess spread, which is being used as available funds for the group II notes. The affirmations on the class II-A, II-B, and II-C notes are based on the credit enhancement and resulting positive parity ratio trends for the respective classes, as well as the sound legal structure.

The KSLT 2004-A class II-D notes are placed on Rating Watch Negative as the performance of the vintage is weaker than expected resulting in a decline in the total trust parity ratio from initial levels. As a result, Fitch is conducting further analyses and requesting additional information from Key Education Resources with the intent to either affirm or downgrade the class II-D notes in the near future. The parity ratios, as defined above, have changed as follows:

--KSLT 2004-A group I parity ratio has increased from 98.76% to 100.25%;