Ratings agencies put Sallie Mae on watch |
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Published
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Mon, 16 Apr 2007 16:42
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NEW YORK (AP) - The three major ratings agencies each put SLM Corp.'s credit ratings on watch for a possible downgrade after the country's largest student loan provider agreed to be bought by a group of investors for about $25 billion.The agencies' various watch lists are used to indicate that a company's ratings are likely to be changed within 30 days.SLM, better known as Sallie Mae, manages $142 billion in education loans. Private equity group J.C. Flowers & Co. and Friedman Fleischer & Lowe will own the majority of the company, with banks Bank of America Corp. and JPMorgan Chase & Co. owning just under half.Standard & Poor's Ratings Services predicated its move on the expectation that the buyers will put more debt on Sallie Mae's balance sheet as part of the planned leveraged buyout. The agency put the 'A' long-term counterparty credit rating and other related ratings on watch 'with negative implications.'Moody's Investors Service put the ratings under review for a possible downgrade, saying after the deal, 'SLM's financial flexibility as well as debt protection measures for unsecured bondholders would be significantly impaired.' Moody's is reviewing the short- and long-term ratings.Fitch Ratings downgraded the company's short-term issuer rating to 'F1' from 'F1+' and put the rest of its ratings on watch for possible downgrade.Fitch said the move does not affect its ratings for JPMorgan or Bank of America.SLM shares rose $8.18, or 17 percent, to $54.94 in late morning trading on the New York Stock Exchange.Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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