Texas guaranteed student loan corporation

NEW YORK -- Fitch Ratings has assigned ratings to the following Student Loan Revenue Notes issued by Brazos Higher Education Authority, Inc. (Brazos):

Ratings for new issuance:

--$175,000,000 senior series 2005 I-A-1 (LIBOR + 0.03%), 'AAA';

--$200,000,000 senior series 2005 I-A-2 (LIBOR + 0.08%), 'AAA';

--$223,000,000 senior series 2005 I-A-3 (LIBOR + 0.11%), 'AAA';

--$240,000,000 senior series 2005 I-A-4 (LIBOR + 0.15%), 'AAA';

--$62,250,000 senior series 2005 I-A-5 (taxable 7-Day auction rate), 'AAA';

--$49,250,000 senior series 2005 I-A-6 (taxable 7-Day auction rate), 'AAA';

--$49,000,000 senior series 2005 I-A-7 (taxable 7-Day auction rate), 'AAA';

--$33,000,000 subordinate series 2005 I-B-1 (taxable 28-Day auction rate), 'A'.

Ratings on previously issued notes:

--$348,200,000 senior series 2004 I-A-1 (LIBOR + 0.06%), 'AAA';

--$362,600,000 senior series 2004 I-A-2 (LIBOR + 0.16%), 'AAA';

--$84,600,000 senior series 2004 I-A-3 (Taxable 28-Day auction rate), 'AAA';

--$84,600,000 senior series 2004 I-A-4 (taxable 28-Day auction rate), 'AAA';

--$79,700,000 senior series 2004 I-A-5 (taxable 28-Day auction Rate), 'AAA';

--$70,000,000 subordinate series 2004 I-B-1 (taxable 28-Day auction rate), 'A'.

Fitch assigns ratings to the new series 2005-1 issuance and confirms its ratings on the series 2004-1 outstanding issuance as listed above. The ratings are based on the quality of the student loan portfolio, the credit enhancement provided, and the sound legal structure. The collateral in the trust consists of 100% Federal Family Education Loan Program (FFELP) student loans. The trust benefits from a reserve fund sized at 0.75% of the aggregate principal amount of the bonds outstanding, with a $500,000 minimum. The ratings address the ability of the trust to redeem notes at maturity and pay timely interest. The ratings do not address the ability of the trust to pay carry-over interest, nor do they address the ability of the auction-rate noteholders to successfully redeem their notes at an auction now or in the future.

The series 2005 notes are the second issuance under the Indenture of Trust between Brazos Higher Education Authority, Inc. and U.S. Bank National Association, as trustee, dated as of Oct. 1, 2004. The proceeds of the series 2005 notes are being used to acquire FFELP student loans, make a deposit to the reserve fund, and pay issuance costs.

The senior series 2005 I-A-1 through 2005 I-A-4 notes are indexed to three-month LIBOR. Interest on the notes is payable quarterly on the 25th of each March, June, September, and December beginning June 27, 2005. The legal final maturity for the series 2005 I-A-1, 2005 I-A-2, 2005 I-A-3, and 2005 I-A-4 notes is Sept. 26, 2016, Dec. 26, 2018, Sept. 26, 2022, and March 26, 2029, respectively.

The senior series 2005 I-A-5 through 2005 I-A-7 are taxable, seven-day auction-rate securities and the subordinate series 2005 I-B-1 notes are taxable, 28-day auction-rate securities. Interest is payable on the first business day following the end of each auction period. The legal final maturity for the notes is June 25, 2041.

As noted, the collateral securing the notes consists entirely of FFELP student loans. The FFELP loans are guaranteed at least 98% by an eligible guarantor and reinsured by the U.S. Department of Education (ED) depending on their disbursement date.

The issuer is Brazos Higher Education Authority, Inc., a nonprofit, 501(c)(3) corporation organized in 1975 under the Texas Non-Profit Corporation Act, which also operates pursuant to Chapter 53, Texas Education Code on behalf of the City of Waco, Texas. Brazos issues tax-exempt debt under its 150(d) tax designation by the Internal Revenue Code as a qualified scholarship funding corporation. Brazos is also affiliated with Brazos Higher Education Service Corporation, Inc. and Brazos Student Finance Corp.

Brazos Higher Education Service Corporation, Inc. is the master servicer, with CFS-SunTech, Pennsylvania Higher Education Assistance Agency, and Sallie Mae Servicing, acting as subservicers for the student loans.