Sallie Mae 2010 Annual Report Download - page 157

7. Borrowings (Continued)
is now $7.5 billion, reflecting an increase of $2.5 billion over the previously scheduled facility reduction. The
scheduled maturity date of the facility is January 10, 2014. We paid an extension fee of $2 million. The usage
fee for the 2010 Facility remains unchanged at 0.50 percent over the applicable funding rate. The amended
facility features two contractual reductions over the term. The first reduction is on January 13, 2012, to
$5.0 billion. The second reduction is on January 11, 2013, to $2.5 billion. If we fail to reduce the facility at
either trigger point, the usage fee increases to a maximum of 2.00 percent over the applicable funding rate. If
liquidity agreements are not renewed on the trigger dates, the usage fee increases to 1.00 percent over the
applicable funding rate on January 13, 2012 and 1.50 percent over the applicable funding rate on January 11,
2013. All other terms are consistent with the original 2010 Facility described above.
SLC Acquisition Financing
On December 31, 2010, we closed on our agreement to purchase an interest in $26.1 billion of securitized
federal student loans and related assets from the Student Loan Corporation (“SLC”), a subsidiary of Citibank,
N.A. The purchase price was approximately $1.1 billion. The transaction was funded by a 5-year term loan
provided by Citibank in an amount equal to the purchase price. The loan is secured by the purchased assets
and guaranteed by us. The loan bears interest at a rate of LIBOR plus 4.50 percent, and is subject to
scheduled quarterly principal payments of the lesser of (i) 2.5 percent of the original principal amount of the
term loan or (ii) the residual cash flow derived from the assets securing the loan. Residual cash flow in excess
of that needed to make quarterly principal payments is restricted but we are permitted, at our option, to prepay
the obligation, in whole or in part, at any time without penalty.
Securitizations
In early 2009, the Federal Reserve Bank of New York initiated a program, The Term Asset-Backed
Securities Loan Facility (“TALF”), to facilitate renewed issuance of eligible consumer and small business
ABS with a term of up to five years. For student loan collateral, TALF expired on March 31, 2010. During the
program, we completed five transactions totaling $7.5 billion which were TALF eligible.
In 2009, we completed four FFELP long-term ABS transactions totaling $5.9 billion. The FFELP
transactions were composed primarily of FFELP Consolidation Loans which were not eligible for the ED
Conduit Program or the TALF. During 2009, we completed $7.5 billion of Private Education Loan term ABS
transactions, all of which were private placement transactions and some were TALF eligible. On January 6,
2009, we closed a $1.5 billion 12.5 year ABS based facility (“Total Return Swap Facility”).
In March, 2010, we issued a $1.6 billion Private Education Loan term ABS transaction which was
TALF-eligible. The issuance included one $149 million tranche bearing a coupon of Prime minus 0.05 percent
and a second $1.401 billion tranche bearing a coupon of 1-month LIBOR plus 3.25 percent.
In April, 2010, we issued a $1.2 billion FFELP long-term ABS transaction. The issuance included
$1.2 billion A Notes bearing a coupon of 1-month LIBOR plus 0.40 percent and $37 million B Notes bearing
a coupon of 1-month LIBOR plus 0.90 percent. The B Notes were purchased by us in their entirety on the
settlement date. This transaction was composed primarily of FFELP Stafford and PLUS loans.
In July 2010, we redeemed our $1.5 billion SLM Private Education Loan Trust 2009-A ABS issue and
closed new offerings of our $869 million SLM 2010-B and $1.7 billion SLM 2010-C Private Education Loan
Trust ABS issues. Approximately $875 million of the 2010-B and 2010-C bonds were issued at a weighted
average coupon of 1-month LIBOR plus 2.23 percent; the remaining $1.7 billion of bonds were financed
under our Total Return Swap Facility. We raised approximately $1.0 billion of net additional cash on these
concurrent transactions.
F-54
SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts, unless otherwise stated)