Fitch Affirms KeyCorp Student Loan Trust 1999-A and 1999-B; Assigns Stable Outlooks

NEW YORK, Oct 30, 2009 (BUSINESS WIRE) -- Fitch Ratings has affirmed and assigned Stable Outlooks to the ratings of KeyCorp Student Loan Trust 1999-A and 1999-B. Additionally, Fitch has removed the 1999-B class M notes from Rating Watch Negative. The affirmations reflect the sufficient level of enhancement in each trust to protect investors from incremental losses on the private student collateral and basis risk. Despite Fitch's negative view on the private student loan sector in general, Stable Outlooks are assigned because the loss multiples well in excess of the level commensurate with the respective rating are expected to provide rating stability for the next two years. The actions are based upon Fitch's Global Structured Finance Criteria and U.S. Private Student Loan ABS Criteria.

For the portion of each trust that is backed by private student loans, Fitch conducted a review of the collateral performance that involved the calculation of loss coverage multiples based on the most recent variables. A projected net loss amount was compared to available credit enhancement to determine the loss multiples. Fitch used historical vintage loss data provided by the issuer to form a loss timing curve representative of each of the 1999-A and 1999-B private student loan collateral pools. After giving credit for seasoning of loans in repayment, Fitch applied the current cumulative gross loss level to this loss timing curve to derive the expected gross losses over the remaining life for each trust. A recovery rate of 30% was applied, which was the level assumed during the transactions' initial reviews.

The available credit enhancement for the trusts consists of excess spread, overcollateralization, and subordination for senior and mezzanine notes. Fitch assumed excess spread to be the lesser of the historical average excess spread (earning on the assets minus interest payments to bondholders and fees) and the most recent 12-month average excess spread, and applied that same rate over the remaining life. The coverage multiples at each rating category were sufficient for the current rating categories. In addition, the credit enhancement available to cover basis risk tied to the FFELP portion of the collateral was deemed sufficient. The excess credit enhancement amount allocated to FFELP collateral was the amount of credit enhancement remaining after allocating the credit enhancement amount required to maintain the minimum private student loan multiple for the respective rating categories.

The KeyCorp 1999-A and 1999-B trusts consist of FFELP, third-party guaranteed private student loans and non-guaranteed private student loans. The private student loans are intended to assist individuals in financing their undergraduate or graduate education beyond what the FFELP affords. The 1999-A trust student loans are serviced by the Pennsylvania Higher Education Assistance Agency (PHEAA). The 1999-B trust student loans are serviced by PHEAA and Great Lakes Educational Loan Services, Inc. (rated 'Proficient Plus' for FFELP and 'Proficient' for private loan servicing by Fitch).

The following applicable criteria reports are available on Fitch's web site at 'www.fitchratings.com': 'Global Structured Finance Rating Criteria', dated Sept.

30, 2009 and 'U.S. Private Student Loan ABS Criteria', dated Aug. 24, 2009.

Fitch has affirmed the following ratings and assigned Stable Rating Outlooks: KeyCorp Student Loan Trust 1999-A: --Class A-2 at 'AAA'; --Class B at 'A'.

KeyCorp Student Loan Trust 1999-B: --Class A-2 at 'AAA'; --Class M at 'AAA'; --Class B at 'A+'.

Additional information is available at 'www.fitchratings.com'.

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SOURCE: Fitch Ratings CONTACT: Fitch Ratings, New York Paul Landerman, [phone] Aoto Kenmochi, [phone] Media Relations: Sandro Scenga, [phone] [e-mail] Copyright Business Wire 2009 -0- KEYWORD: United States

North America

New York INDUSTRY KEYWORD: Professional Services

Finance SUBJECT CODE: Bond/Stock Rating