Moody's drops SLM

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

The agency said that the senior unsecured long-term debt rating was lowered to Baa2 from Baa1, the subordinated shelf rating was lowered to provisional Baa3 from provisional Baa2 and the preferred stock rating was lowered to Ba1 from Baa3.

The commercial paper and other short-term obligations rating was confirmed at Prime-2, Moody's added.

The outlook is negative.

The rating action is driven by Moody's view that the company's intrinsic credit quality and financial fundamentals, in particular core profitability and liquidity and funding, have been weakened.

Specifically, the agency said that SLM's profit dynamics and to a lesser degree its asset mix, are expected to shift markedly such that the firm will have a heavier reliance on the private education loan business.

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