SLM Corp issues $500M in senior notes due 2030

SLM Corporation (NASDAQ:SLM), a leading financial services company specializing in education financing with a market capitalization of nearly $6 billion, has successfully closed an offering of $500 million in senior notes, the company disclosed in a recent SEC filing. The company has demonstrated strong performance, with its stock delivering a 47% return over the past year.

According to InvestingPro, SLM maintains a "GOOD" financial health rating, with 5 analysts recently revising their earnings expectations upward. The 6.5% notes, due in 2030, were offered under a previously filed registration statement, and are set to mature on January 31, 2030.

The offering, which was finalized on Friday, January 31, 2025, comes with an interest rate of 6.5% per annum, payable semi-annually starting July 31, 2025. SLM Corporation has the option to redeem these notes, in whole or in part, at predetermined redemption prices detailed in the indenture.

SLM Corporation plans to utilize the net proceeds from this offering, alongside its cash reserves, to fully redeem the outstanding $500 million of its 4.2% senior notes due in 2025. This redemption is expected to take place on February 18, 2025, with the redemption price being the greater of 100% of the principal amount plus accrued interest, or a sum determined by a specified formula involving Treasury Rates.

The indenture agreement for the notes was carried out with Deutsche Bank (ETR:DBKGn) National Trust Company, serving as the trustee. The legal validity of these notes has been confirmed by Davis Polk & Wardwell LLP, as stated in the SEC filing.

The offering was managed by J.P. Morgan Securities LLC and Barclays (LON:BARC) Capital Inc., acting as representatives of the underwriters. The underwriting agreement includes standard terms for such transactions, including indemnification and contribution obligations.

This financial move aligns with SLM Corporation’s strategy to manage its debt portfolio effectively. The company’s decision to redeem higher-interest notes and issue new ones at a lower rate reflects a proactive approach to capital management. Trading at a P/E ratio of 10.4, SLM shows strong fundamentals and is currently trading near its Fair Value according to InvestingPro analysis. For deeper insights into SLM’s financial health and future prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

With analyst price targets ranging from $30 to $34 per share and a strong track record of profitability, SLM continues to demonstrate resilience in the financial services sector. Access additional ProTips and detailed financial metrics by subscribing to InvestingPro.

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