Trusts that sold auction-rate securities backed by student loans are facing downgrades as debt costs continue to rise and borrowers struggle to refinance, Fitch Ratings said Tuesday.

"While most trusts have shown resilience to the market freeze, none were structured to withstand permanent market dislocation," Kevin Duignan, head of Fitch's U.S. asset-backed securities group in New York, said in a press release. This makes "negative rating actions on certain transactions less a case of 'if' and more a case of 'when.' "

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