S&P Raises Ratings on Nellie Mae Corp.; Off Watch.NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire-- July 14, 1999--Standard & Poor's today raised the long-term counterparty and senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. ratings of Nellie Mae Nellie Mae See Student Loan Marketing Association. Corp. to double-'A'. At the same time, Standard & Poor's removed the ratings from CreditWatch, where they were placed on June 2, 1999. The rating action follows the purchase of 100% of Nellie Mae's stock by SLM See service level management system and spatial light modulator. Holding Corp. (SLM). The outlook is stable. Nellie Mae was acquired by Student Loan Marketing Association (SLMA See Student Loan Marketing Association. ), SLM's wholly owned triple-'A' rated government-sponsored enterprise (GSE GSE general somatic efferent system. ) subsidiary. The student loan assets and liabilities of Nellie Mae will remain in a subsidiary of SLMA, while Nellie Mae's loan origination business and certain nonstudent loan assets will be transferred to a newly formed subsidiary of SLM. While Nellie Mae's current debt does not receive the implicit support enjoyed by GSEs, unlike SLMA's debt, Nellie Mae, as a subsidiary of SLMA, should achieve some benefit from this implicit support. The ratings on SLMA reflect the company's status as a GSE. GSEs are corporations created by the federal government to serve a public purpose. In SLMA's case, the public purpose is to support educational finance by providing liquidity support for student loans. GSE debt securities have implicit government support, but are not backed by the full faith and credit of the federal government. Further enhancing the creditworthiness Creditworthiness The condition in which the risk of default on a debt obligation by that entity is deemed low. Creditworthiness Eligibility of an individual or firm to borrow money. of the company are the low-risk nature of its assets and its ample balance sheet liquidity and profitability, coupled with its strong market dominance in the purchasing, holding, and servicing of federally guaranteed student loans. Additionally, SLMA has broadened its funding base by expanding into the student loan securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. market, and is currently the largest securitizer of student loans, Standard & Poor's said.--CreditWire -0- RATINGS UPGRADED Nellie Mae Corp. To: From: Long-term counterparty credit rating AA A- Senior unsecured AA A- |
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