Moody's cuts SLM to junk

Moody's Investors Service said it downgraded SLM Corp.'s long-term senior unsecured rating to Ba1 from Baa2 and short-term rating to not-prime from prime-2 and assigned a negative outlook.

The action concludes the review for possible downgrade that began in February.

The downgrade reflects concerns regarding SLM's earnings and cash flow generation capacity as the company transitions to a post-FFELP lending environment, continued uncertainties facing the company related to the political and consumer lending environment and its liquidity and funding position, Moody's said.

This combination of circumstances is not consistent with an investment-grade ratings profile, the agency said.

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