RESTON, Va., May 13, 2009–SLM Corporation (NYSE: SLM), commonly known as Sallie Mae, today issued a statement in response to a Moody’s downgrade of SLM Corporation’s long-term and short-term unsecured debt.
“This action is both unfortunate and surprising in light of the numerous recent positive developments in the financial strength of the company,” stated Albert L. Lord, CEO. Mr. Lord continued, “Moody’s conclusion rests mostly on its predictions of the political process surrounding the Federal Student Loan program. This seems to us inappropriately speculative and very premature since any changes made to America’s student loan programs must be legislated by Congress – a several months process not yet started.”
Mr. Lord cited market developments since Moody’s placed the company “under review for possible downgrade” in February. Sallie Mae’s liquidity position has materially strengthened as the company secured liquidity in a variety of transactions, totaling over $11 billion in new sources this quarter alone. Specifically, in April, the company completed three FFELP asset-backed securitization (ABS) transactions totaling approximately $5.1 billion. In May, the company completed a $2.6 billion private education loan (ABS) transaction. In addition, the organization extended $22 billion of its asset-backed commercial paper (ABCP) facility for one year, paid in full a $2.7 billion private credit (ABCP) facility, and this week announced its initial placement through the U.S. Department of Education-sponsored “Straight A Funding” conduit.
Jack Remondi, CFO of Sallie Mae, stated that Moody’s actions are directionally at odds with the recent market performance in the company’s debt securities. “Investors see what we see, a substantial strengthening of our liquidity position and several new sources of term, lower cost funding. Moody’s action, in light of these recent developments, is perplexing.”
Mr. Remondi continued, “It is difficult to understand how an enterprise with 80 percent of its assets guaranteed by the U.S. Government, over 70 percent of its assets funded to term and the strength of our franchise merits less than an investment-grade rating.”
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SLM Corporation (NYSE:
SLM), commonly known as Sallie Mae, is the nation’s leading saving, planning and paying for education company. Sallie Mae’s saving programs, planning resources and financing options have helped more than 31 million people make the investment in higher education. Through its subsidiaries, the company manages $176 billion in education loans and serves 10 million student and parent customers. In addition, the company’s Upromise program has enabled 11 million members to earn more than $525 million in rewards to help pay for college. Its Upromise affiliates also manage more than $23 billion in 529 college-savings plans. Sallie Mae offers services to a range of institutional clients, including colleges and universities, student loan guarantors and state and federal agencies. More information is available at
www.SallieMae.com. SLM Corporation and its subsidiaries are not sponsored by or agencies of the United States of America.