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Fitch Rates $98.7MM NorthStar Student Loan Trust II Adj Rate Student Loan Revs, 2012A 'AAsf/F1+sf'

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NEW YORK--(BUSINESS WIRE)--

Fitch Ratings assigns a rating of 'AAsf/F1+sf', Stable Outlook, to the $98,700,000 NorthStar Student Loan Trust II adjustable rate student loan revenue bonds, series 2012A. The initial bond issuance is $98,700,000 with no option under the trust indenture to issue additional bonds. The rating is based on the support provided by an irrevocable direct-pay letter of credit (LOC) issued by Royal Bank of Canada (rated 'AA/F1+', Stable Outlook).

The bank is obligated to make payments of principal of and interest on the bonds upon maturity, acceleration and redemption, as well as purchase price for tendered bonds. The ratings will expire upon the earliest of: (a) Sept. 15, 2015, the initial stated expiration date of the LOC, unless such date is automatically extended for one year periods; (b) conversion from the weekly interest rate mode; (c) any prior termination of the LOC; and (d) defeasance of the bonds. The LOC provides full and sufficient coverage of principal plus an amount equal to 50 days of interest at a maximum rate of 15% based on a 360-day year composed of 12 30-day months and purchase price for tendered bonds, while in the weekly rate mode. The Remarketing Agent for the bonds is Royal Bank of Canada. The bonds are expected to be delivered on or about Oct. 25, 2012.

The bonds initially bear interest at a weekly rate, but may be converted to a term rate. While bonds bear interest in the weekly rate mode, interest payments are due on the first business day of each month, commencing on Nov. 1, 2012. The trustee is obligated to make timely draws on the LOC to pay principal, interest, and purchase price. Funds drawn under the LOC are held uninvested, and are free from any lien prior to that of the bondholders.

Holders may tender their bonds on any business day, provided the trustee, who also acts as the tender agent, and the remarketing agent are given the requisite prior notice of the purchase. The bonds are subject to mandatory tender: (1) upon conversion of the interest rate; (2) upon substitution or termination of the LOC; and (3) following receipt of written notice from the bank of an event of default under the reimbursement agreement, directing such mandatory tender. The bank has the option of directing acceleration rather than a mandatory tender upon an event of default under the reimbursement agreement. The bonds shall be accelerated following the trustee's receipt of notice of non-reinstatement of the interest portion of the LOC. Optional and mandatory redemption provisions also apply to the bonds including a mandatory redemption upon the expiration of the LOC.

Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'U.S. Municipal Structured Finance Criteria', Feb. 28, 2012;

--'Rating Guidelines for Letter of Credit', July 20, 2012.

Applicable Criteria and Related Research:

U.S. Municipal Structured Finance Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=672570

Rating Guidelines for Letter of Credit-Supported Bonds

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=681737

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Fitch Ratings
Primary Analyst:
Autumn Mascio, +1-212-908-0896
Director
Fitch, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst:
Melvin Zhou, +1-212-908-0503
Director
or
Committee Chairperson:
Cynthia Ullrich, +1-212-908-0609
Senior Director
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Media Relations:
Sandro Scenga, New York, +1 212-908-0278
sandro.scenga@fitchratings.com

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