Fitch Affirms EdSouth Indenture No. 2, LLC, Series 2012-1 Senior Note

NEW YORK--()--Fitch Ratings affirms at 'AAAsf' the senior student loan note issued by EdSouth Indenture No. 2, LLC, Series 2012-1. The Rating Outlook for the note, which is tied to the sovereign rating of the U.S. government, remains Negative. Fitch used its 'Global Structured Finance Rating Criteria', and 'Rating U.S. Federal Family Education Loan Program Student Loan ABS' to review the ratings.

Key Rating Drivers

The rating affirmation is based on the sufficient level of credit enhancement to cover the applicable risk factor stresses. Credit enhancement for the senior note consists of overcollateralization and projected minimum excess spread.

Rating Sensitivities

Since FFELP student loan ABS rely on the U.S. government to reimburse defaults, 'AAA'sf FFELP ABS ratings will likely move in tandem with the 'AAA' U.S. sovereign rating. Aside from the U.S. sovereign rating, defaults and basis risk account for the majority of the risk embedded in FFELP student loan transactions. Additional defaults and basis shock beyond Fitch's published stresses could result in future downgrades. Likewise, a buildup of credit enhancement driven by positive excess spread given favorable basis factor conditions could lead to future upgrades.

Fitch affirms the following:

EdSouth Indenture No. 2, LLC, Series 2012-1:

--Series 2012-1 at 'AAAsf'; Outlook Negative.

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:

--'Global Structured Finance Rating Criteria'(June 6, 2012);

--'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria' (April 3, 2012).

Applicable Criteria and Related Research

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679923

Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=675202

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