The corporate ratings of student lender SLM Corp. or Sallie Mae (SLM) was downgraded by Fitch Ratings yesterday. The outlook assigned was negative. The ratings downgrade reflects the agency’s concern about the company’s business model. Fitch expects the company to continue to shift to a fee-for-service business model with its subsidiary Sallie Mae Bank originating higher-risk private education loans.   Fitch downgraded the long-term issuer default and senior debt ratings to "BBB-" from "BBB", while preferred stock was downgraded to "BB" from "BB+". The short-term issuer default rating and short-term debt ratings were affirmed at "F3". About $34.4 billion of debt and preferred stock is affected by these actions.   To restore the $92 billion student loan market, the House Education committee approved a legislation, which closes the Federal Family Education Loan Program and shifts most of the student lending into the Education Department's Direct Loan program. ...

Moody's Investors Service said on Thursday that is thinking about downgrading the long-term ratings of the nation's biggest student lender, SLM Corp. or Sallie Mae (SLM).   Previously, on May 13, Moody's cut Sallie Mae's ratings to junk, prompting the student loan provider to call the action "premature". The expected action by the rating agency would affect Sallie Mae's long-term Ba1 (non-investment grade) rating.   The agency is considering a possible downgrade as Sallie Mae faces significant uncertainties related to the political and consumer lending environment for student lenders. According to Moody’s, these issues could challenge the company's liquidity and funding position as it nears large unsecured debt maturities in 2010 and particularly in 2011.   The agency also cited that cash flow generation is taking on greater importance in the lender's credit profile because the firm's unsecured debt balance exceeds its unencumbered earning assets.   Higher funding ...

div style="text-align: justify;"JP Morgan is upgrading span style="font-weight: bold;"SLM Corp (NYSE:SLM)/span on a long-term view that its transition to primarily a loan servicer, as opposed to a lender, will lower interest rate and funding risks, thus improving earnings visibility. Firm emphasizes they are taking a longer view on this call, but with the successful inception of Straight-A funding greatly improving the liquidity profile and the recent award of the ED servicing contract, span style="font-weight: bold;"they think SLM is currently trading at about 50% of their conservative DCF estimate of $15/span. As such, they are upgrading the stock to OW (a 6 to 12-month rating), and setting a YE09 price target of $12, a 20% discount to our estimated DCF value.br /br /span style="font-weight: bold;"FFEL portfolio run-off alone worth $7.60/share./span SLM's $140B+ FFEL book is already in run-off, as SLM is expected to sell its ECASLA loans to ED this year ...

SLM Corp. (SLM) reported 1Q09 GAAP net loss of $21 million or $0.10 per diluted share, compared to $216 million or $0.52 per diluted share in the prior quarter. The primary reason for the lower-than-expected results was the decline in the net interest income due to the wide spread between CP rate (index in which SLM's federal student loan assets are based) and LIBOR (principal index in which SLM's liabilities are based).Credit metrics worsened during the reported quarter. Net charge-offs as a percentage of average managed private education loans (PELs) in repayment increased 70 bps sequentially and delinquencies as a percentage of managed PELs in repayment increased 320 bps sequentially.Higher funding costs also added to the negative results. However, we expect funding costs to come down slightly once the federally sponsored programs (TALF and Conduit Facility) gather momentum.One of the items in ...

Here are the stocks added to the Zacks #5 Rank ("strong sell") List today:

Albemarle Corp (ALB) Associated Banc-Corp (ASBC) BancFirst Corp (BANF) BancorpSouth Inc (BXS) BHP Billiton Plc (BBL) Cape Bancorp Inc (CBNJ) Cascade Bancorp (CACB) A M Castle & Co (CAS) Cimarex Energy Co (XEC) Coleman Cable Inc (CCIX) Cousins Properties Inc (CUZ) Cowen Group Inc (COWN) Cytec Industries Inc (CYT) Eastman Chemical Co (EMN) Edison International (EIX) Emergent BioSolutions Inc (EBS) Enterprise GP Holdings LP (EPE) First Busey Corp (BUSE) German American Bancorp Inc (GABC) The Gorman-Rupp Co (GRC) Harbin Electric Inc (HRBN) Hertz Global Holdings Inc (HTZ) HLTH Corp (HLTH) John Bean Technologies Corp (JBT) Kennametal Inc (KMT) Kinder Morgan Management LLC (KMR) Lexmark International Inc (LXK) The ...

Asian markets rose for a fourth day amid a global rally in stocks as hopes that the worst of the economic crisis is over boosted demand for riskier assets.  Investors continued to look at the bright side of things, shrugging off a U.S. jobs report on Friday which showed unemployment rose to 8.5% in March.  Although the numbers were up from 8.1% in February, they were only slightly worse than expected.  Sunday's launch of a long-range missile by North Korea appeared to have little impact on the markets and was seen as having little economic implication.  Boosting the sentiment further were U.S. Federal Reserve Chairman Ben Bernanke's comments that policies to ease the financial crisis through infusion of billions of dollars in aid were beginning to work. 

Japan's Nikkei 225 stock average closed up 108.09 points, or 1.2%, to 8,857.93, while Hong Kong's Hang Seng jumped 452.35 points,

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The once booming business of private equity faces an uncertain future. What’s not uncertain, however, is that many private equity deals are imploding from the weight of leveraged debt and greed. Inevitable bankruptcies will result in higher unemployment and a deeper recession.

Private equity is an asset class consisting of equity securities in operating companies that are not publicly traded.  The name “private equity”is the rechristened, kinder and more gentile label for what used to be known as leveraged buyouts, or LBOs. But make no mistake about it, while leverage may not be part of the name any more, it remains a big part of every private equity deal.

LBO firms, or “franchises”, as Henry Kravis, co-founder of Kohlberg Kravis Roberts & Co. (KKR), likes to call his shop, acquire publicly traded operating companies. Then they streamline management and operations to increase profitability and hope to cash out

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Blue Ridge CapitalBlue Ridge Capital | John A. Griffin Holdings AnalysisThis post is being written as part of my Investment Securities Tool which analyzes the holdings of hedge fund managers.Blue Ridge Capital is ran by John A. Griffin. Griffin is similar to Steve Mandel at Lone Pine Capital and Lee Ainslie at Maverick Capital in that they all are 'Tiger Cubs' (a.k.a. pupils of Julian Robertson while at Tiger Management). Griffin though, is more well known because he was Julian Robertson's right hand man. So, needless to say, the dude knows his stuff. Blue Ridge seeks absolute returns by investing in companies who dominate their industries and shorting the companies who have fundamental problems. And, right off the bat that presents us with a bit ...