OREANDA-NEWS. Fitch Ratings has taken the following rating actions:

Brazos Student Finance Corp. 2003 Indenture of Trust, Series 2003

--Class A-3 downgraded to 'AAsf' from 'AAAsf'; Outlook Stable;

--Class A-4 downgraded to 'AAsf' from 'AAAsf'; Outlook Stable;

--Class B affirmed at 'BBBsf'; Outlook Stable.

The downgrades on the A-3 and A-4 notes are due to their inability to pass cash flow stresses necessary to maintain their current ratings.

KEY RATING DRIVERS

Collateral Quality: The trust collateral is comprised of 16.85% of private student loans originated under Brazos's Alternative Loan Program and 83.15% of Federal Family Education Loan Program (FFELP) loans. The credit quality of the FFELP collateral is high, in Fitch's opinion, based on the guarantees provided by the transaction's eligible guarantors and reinsurance provided by the U. S. Department of Education (ED) for at least 97% of principal and accrued interest. The projected remaining defaults for the private student loans are expected to range between 10%-16% as a percentage of current principal balance. A recovery rate of 15% was applied which was determined to be appropriate based on data provided by the issuer.

Credit Enhancement: Credit enhancement is provided by overcollateralization and excess spread. The class A notes also benefit from subordination from the class B notes. Senior and total parity as of the March 2016 distribution are 109.37% and 107.63%, respectively. The trust is not releasing cash.

Liquidity Support: Liquidity support for the notes is provided by a reserve account which is equal to the greater of 1% of the note balance and $500,000. The reserve account is currently at $823,263.

Servicing Capabilities: The portfolio is serviced by Pennsylvania Higher Education Assistance Agency (63.13%), Nelnet Inc., (17.02%), Great Lakes Educational Loan Services Inc., (16.66%), Navient Solutions (2.52%) and Xerox Education Services (0.67%). Fitch believes that all four servicers are acceptable servicers of FFELP and private student loans given their long servicing history.

Under the Counterparty Criteria for Structured Finance and Covered Bonds, dated July 2016, Fitch looks to its own ratings in analyzing counterparty risk and assessing a counterparty's creditworthiness. The definition of the permitted investment for this deal allows possibility of using investments that do not meet Fitch's criteria, this represents a criteria variation. Fitch doesn't believes such variation have a measurable impact upon the ratings assigned.

RATING SENSITIVITIES

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

DUE DILIGENCE USAGE

No third-party due diligence was provided or reviewed in relation to this rating action.