S&P: SLM on watch

Standard & Poor's said it placed its A long-term counterparty credit rating and other related ratings on SLM Corp. (also known as Sallie Mae) on CreditWatch with negative implications, following the announcement that the company will be sold to a group of investors for about $25 billion.

This investor group is led by private-equity firm J.C. Flowers & Co. (unrated), which together with private-equity firm Friedman Fleischer & Lowe, will invest $4.4 billion and own 50.2% of the company, while Bank of America Corp. (AA/stable/A-1+) and JPMorgan Chase & Co. (AA-/stable/A-1+) will each invest $2.2 billion and own 24.9%, the agency said.

According to S&P, the CreditWatch listing reflects the possibility for negative rating actions, likely by multiple notches, depending on the amount of additional debt placed on the balance sheet, typical of leveraged buyouts.

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