The long-term rating assigned to Michigan Higher Education Student Loan Authority's $50 million variable-rate demand bonds series XII-Y is based on an unconditional, irrevocable bond insurance policy that guarantees payment of scheduled principal and interest and is provided by AMBAC Assurance Corp. (AMBAC; 'AAA' insurer financial strength rating). The 'A-1+' short-term rating reflects the likelihood of payment of purchase price based on the availability of the liquidity facility provided by Lloyds TSB Bank PLC. Although the 'AAA' rating is dependent on AMBAC's insurer financial strength rating, the underlying transaction is of investment-grade quality, as illustrated by the following: The structural features that limit recycling and the withdrawal of funds; The debt service reserve account and excess spread; and The utilization
