The long-term rating assigned to Pennsylvania Higher Education Assistance Agency's (PHEAA's) student loan adjustable rate revenue bonds 2006 series A is based on an unconditional, irrevocable financial guarantee insurance policy provided by Ambac Assurance Corp. ('AAA' insurer financial enhancement rating) that guarantees payment of scheduled principal and interest. The short-term rating reflects the likelihood of payment of the purchase price, based on the availability of the liquidity facility provided by Morgan Stanley Bank ('A+/A-1'). The ratings are further supported by a sound legal structure and federal reinsurance of at least 97% of loan principal and interest, overcollateralization, and the debt service reserve account. The bonds will initially bear interest at a weekly rate and thereafter may be converted to a
