Fitch: Student Loan ABS Credit Quality Will Worsen, But Ratings Will Remain Stable.Business Editors NEW YORK--(BUSINESS WIRE)--July 25, 2003 Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. expects the amount of student loans in deferment deferment Delaying of an obligation. See Default, Medical student debt. Cf Forbearance. and forbearance to increase over the next six months as pressure on consumers mounts given the weak employment situation and increasing consumer leverage, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the latest student loan asset-backed securities newsletter published this week by Fitch. However, while downward rating volatility has persisted in other asset-backed (ABS) sectors, bonds collateralized by student loans have held up well due in part to the relatively stable excess spread prevalent in student loan portfolios. The newsletter also highlights the historically low interest rates, noting that the consolidation trend that began three years ago will continue for at least another year. However, Fitch views the growing amounts of consolidation loan collateral making its way into current and future securitizations as a positive trend. In the second quarter of 2003, Fitch assigned ratings to 28 student loan ABS transactions accounting for over $12.8 billion of new student loan-backed bonds. Sallie Mae Sallie Mae: see SLM Corporation. accounted for approximately 54% of the overall securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. volume, with approximately $6.9 billion in the second quarter and $13.2 billion through June 30. The newsletter 'The Student Loan Report Card' is available on Fitch's web site at 'www.fitchratings.com' by linking to the 'ABS' sector and clicking on 'Newsletters'. |
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