One Less Investment Option ForCUs

WALL STREET - (11/03/04) -- Traders are reporting a brisk marketfor the remaining bonds issued through the government sponsoredenterprise operated by Sallie Mae, as the student loan giant movesto buy back all of its outstanding GSE debt in preparation for thefull privatization of the company, targeted for year-end. Thecompany has already repurchased $1.7 billion of its GSE debt at a6% premium, and expects to buy back the remaining $2 billion worthof GSE debt outstanding at similar spreads, according to recordsfiled with the Securities and Exchange Commission. "They've beenwinding down (the GSE charter) for some time now," said ChrisWolfe, an analyst for Fitch Investors. Though some credit unionsare believed to have participated in the buyback, the repurchaseswill remove a major investment option for credit unions, which arelimited to investing in debt issued by the U.S. Treasury or one ofthe government sponsored agencies, like Sallie Mae, Fannie Mae orFreddie Mac. One major credit union bond dealer said they stoppedselling Sallie Mae bonds to credit unions months ago. Sallie Maeofficials did not return several calls seeking comment.