News From Rainier
On May 13, 2009, Moody’s Investor Services lowered its rating for Sallie Mae bonds (“SLM Bonds”) from “Baa2” to "Ba1”, which is considered below investment grade. Moody’s based its downgrade on concerns about decreased cash flow resulting from anticipated reductions in government subsidies for student loans. The other widely-utilized rating agencies, S&P and Fitch, have not downgraded the SLM Bonds and currently rate them BBB- and BBB respectively (investment grade).
As of 3/31/09, the Balanced Portfolio (RIMBX) held 1.23% and the Intermediate Fixed Income Portfolio (RIMFX) held 1.78% of SLM Bonds. Rainier’s current strategy is to continue to hold the SLM Bonds in an attempt to maximize their value while continuing to monitor the situation as events develop. Our rationale for continuing to hold the SLM bonds is based on the cash flow and liquidity available to Sallie Mae to repay the debt.
We will continue to monitor the market and status of the Administration’s 2010 proposed budget changes for effects on Sallie Mae and adjust our strategy prudently.
Fund holdings are subject to change at any time and should not be considered recommendations to buy or sell any security. Current and future portfolio holdings are subject to risk.