OREANDA-NEWS. S&P Global Ratings today lowered its ratings on two classes from MRU Student Loan Trust 2008-A, an asset-backed securities (ABS) transaction backed by private student loans. At the same time, we affirmed the ratings on three classes (see list).

We lowered our ratings on the class A notes because high levels of defaults and the high cost of funds continue to cause a decline in credit enhancement (as measured by parity). Since our last review of the class A notes, the pace of defaults has declined, and they have continued to benefit from the interest reprioritization of other classes. That said, the pace of defaults is still high. We will continue to monitor the changes in parity, the pace of defaults, and the benefits the notes receive from both the current interest reprioritization of class C and D interest and the expected future reprioritization of class B interest.

We affirmed our rating on class B at 'CC (sf)' because we expect this class to experience interest shortfalls in the future and because we do not expect this class to be repaid by the legal final maturity date. We affirmed our ratings on classes C and D at 'D (sf)' because the affected classes are not receiving any interest payments and because we expect interest shortfalls to continue for these classes. Further, we also do not expect these classes to be repaid by their legal final maturity dates. We do not rate the class E notes.

TRANSACTION STRUCTUREThe transaction employs various interest subordination triggers. If any class' parity is less than 100%, then the principal payment to restore parity to that class will be made before the interest payment due to the next class with a lower rating. The funds that would otherwise be available to pay subordinate note interest would be allocated to pay principal to the most senior-paying class of notes. The transaction has depleted both the reserve fund and the cash capitalization account.

The classes' note interest triggers are tested quarterly, and the transaction can cure a breach if it passes the appropriate performance tests on subsequent distribution dates. However, we do not believe the interest trigger, which caused classes C and D to miss interest payments, will be cured and they will continue to breach, considering the underlying private student loan pool's performance trends.