Moody's drops SLM

Moody's Investors Service said it downgraded the ratings of SLM Corp.

The senior unsecured long-term debt rating was lowered to Baa1 from A2, the subordinated shelf rating was lowered to provisional Baa2 from provisional A3, the preferred stock rating was lowered to Baa3 from Baa1 and the commercial paper and other short-term obligations rating was lowered to Prime-2 from Prime-1, the agency said.

Moody's noted that the ratings remain under review for possible further downgrade, pending the outcome of the proposed acquisition of SLM by Mustang Holding Co. Inc.

Moody's said that today's downgrade was the result of its view that SLM's fundamental credit strength had declined given the potential negative financial effects of pending legislative changes and other factors.

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