RESTON, Va. — SLM Corp., the biggest U.S. educational lender, told shareholders it has “liquidity” of $11 billion even as the company’s access to funding for non- government loans becomes more expensive.
The company’s loan portfolio is 82 percent government guaranteed, for which the Department of Education is offering funding through July 2010, Chief Executive Officer Albert Lord said in a letter to shareholders, according to a regulatory filing Thursday. Free cash flow over the next 15 months exceeds maturing debt by $600 million, Lord said.
Sallie Mae, as the company is known, rose 95 cents, or 11 percent, to $9.30 in New York Stock Exchange composite trading after dropping a record 32 percent Wednesday.
“They gave a lot of confidence that their free cash flow is going to be able to pay off their debt that’s coming due,” said William Ryan, a Colorado Springs-based analyst for Portales Partners LLC. “What they’re telling you is they don’t have to access the capital markets.”
Sallie Mae has lost 58 percent of its market value in the past four months on concern it’s being forced to borrow money at rates higher than what it earns from its lending. The company said last month it was expanding its private loan business after legislation passed last year reduced the profits lenders can make on government-guaranteed debt.
The company may have to curtail those plans.
