TEXT-S&P rates Northstar Student Loan 2012A bonds 'AA-/A-1+'

Thu Oct 25, 2012 10:37am EDT

Oct 25 - Standard & Poor's Ratings Services today assigned its 'AA-/A-1+'
rating to NorthStar Student Loan Trust II's (the issuer's) adjustable-rate
student loan revenue bonds series 2012A.

The rating reflects our opinion of the credit and liquidity support that Royal 
Bank of Canada ('AA-/A-1+') provides in the form of an irrevocable direct-pay 
letter of credit (LOC). Under the LOC, Royal Bank of Canada fully supports all 
bond payment obligations when the bonds are in the weekly interest rate reset 
mode. Therefore, our rating applies only during this rate mode. If the bonds 
are converted to another rate mode, we will likely withdraw our rating.
 
The 'AA-' long-term component of our rating is based on our long-term issuer 
credit rating on Royal Bank of Canada ('AA-') and addresses full and timely 
payments of interest and principal when the bondholders have not exercised the 
put option. The 'A-1+' short-term component of our rating is based on our 
short-term issuer credit rating on Royal Bank of Canada ('A-1+') and addresses 
full and timely payments of interest and principal when the bondholders have 
exercised the put option.

In view of the series 2012A bond structure, changes to our rating on the 
weekly rate bonds can result from, among other things, changes to our rating 
on the LOC provider or amendments to the transaction's terms. We will maintain 
a rating on the bonds as long as they are in the weekly rate mode and the LOC 
has not expired or otherwise terminated. If either of these conditions 
changes, we will likely withdraw our rating on the bonds.

RELATED CRITERIA AND RESEARCH
 
Related Criteria
     -- Counterparty Risk Framework Methodology and Assumptions, May 31, 2012 
     -- Methodology And Assumptions: Approach To Evaluating Letter Of 
Credit-Supported Debt, July 6, 2009
 
Related Research
     -- Presale: Northstar Student Loan Trust II - Series 2012A, Oct. 24, 2012
     -- Royal Bank Of Canada, Feb. 15, 2012
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