ISM/OSM yet again

[haha]

Quote:

Originally Posted by FUEGO Anyone besides me not get interest payments from OSM on May 15? Based on my calculations, the interest payments should look like: May - 2.03% June - 2.236% July - 1.616% August - 1.263% Sallie Mae debt rating bumped down to Ba1, ie junk, by Moody's due to potential pain from changes in student loan lending that may or may not happen next year.

No dividend was even declared this month. So it is not a problem with your receiving the payment; there is no payment.

I haven't been projecting the payments. Could you tell me your data source? First we need to be sure that a pyment is in fact due; then figure out why it was not declared.

Intesting that both IS and OSM are up today. Also JSM, the non-inflation adjusted exchange traded debt security is up to $11.

Ha

[clifp]

I noticed no payment also. I started to panic, and than reminded myself that we are dealing with Sallie Mae, and it wasn't too long ago that they overpaid us for our ISM/OSM and actually reversed a payment.

I've seen nothing on the website, that explains why no payment was made. So either the CPI was sufficiently negative to wipe out the 2% base interest or SLM screwed up.

[FUEGO]

Quote:

Originally Posted by haha No dividend was even declared this month. So it is not a problem with your receiving the payment; there is no payment. I haven't been projecting the payments. Could you tell me your data source? First we need to be sure that a payment is in fact due; then figure out why it was not declared.

From the OSM prospectus - May 2009 interest rate = (Jan 2009 CPI - Jan 2008 CPI)/(Jan 2008 CPI) + 2.00%.

I came up with 0.03% for the CPI change plus 2% = 2.03% or ~$0.042 per share (par = $25/sh).

It is small change to me, but I'd like to find out if either my math is screwed up or SLM is defaulting on their bonds (even odds on which is true ).

[haha]

Quote:

Originally Posted by clifp I noticed no payment also. I started to panic, and than reminded myself that we are dealing with Sallie Mae, and it wasn't too long ago that they overpaid us for our ISM/OSM and actually reversed a payment. I've seen nothing on the website, that explains why no payment was made. So either the CPI was sufficiently negative to wipe out the 2% base interest or SLM screwed up.

I just saw Fuego's post, and I found the section of both ISM and OSM prospectuses that specify what month sets the index. ( The third prior month, as announced on the 2nd prior month, for interest accrued Apr15 thru May15, and paid on May 25. They even give an example of figuring interst fro the May period.

That means January 09 over 08, and that figure is positive, and like Fuego for the May pmt on OSM I get $.042288.

So we should have been paid. I asked my broker to run it down; if he can't I will call this cowpie of a company and try to find out what is going on.

When it comes to invesment, there is no such thing as small change to me. I want to know where my money is, and moreover why is it not in my account? On time.

Ha

[FUEGO]

I checked BLS data for the CPI-U non seasonally adjusted data. This is referred to as Bloomberg CPURNSA (CPI Urban Non seasonally adjusted I think). I went and double checked vs. bloomberg's CPURNSA and it gives the same CPI-U NSA numbers as BLS.

There is a 4 month lag between CPI data and the rate that applies. From the prospectus: "For example, for the Interest Period from and including February 15, 2006to and including March 14, 2006, CPIt will be the CPI for November 2005 and CPIt-12 will be the CPI for November 2004." So Nov 05 CPI correlates to March 15 2006 interest rates. Hence Jan 2009 CPI correlates to May 15, 2009 interest rates (and payment).

I just checked my April OSM interest payment and it is correct to the penny at $0.0444 per sh. This is 0.0914% interest for CPI plus 2.00% fixed over 31 days.

May 2009 OSM payment should be $0.04171 per sh. That is 2.03% interest over 30 days.

To the poster that was a tiny bit off each time when comparing calculated vs. actual ISM/OSM payments - double check that you are using daily accrual instead of interest rate divided by 12. They apparently accrue interest daily on these, so periods with 30 days pay a tiny bit less than 31 day periods. And the mid-month payment is tricky - May payment includes the end of April, so the May payment period is only 30 days (in spite of May having 31 days).

Anyone want to give SLM investor relations dept a call on hehalf of the ER forum class of ISM/OSM holders? Just ask them where da money is at.

[haha]

Quote:

Originally Posted by FUEGO I checked BLS data for the CPI-U non seasonally adjusted data. This is referred to as Bloomberg CPURNSA (CPI Urban Non seasonally adjusted I think). I went and double checked vs. bloomberg's CPURNSA and it gives the same CPI-U NSA numbers as BLS. There is a 4 month lag between CPI data and the rate that applies. From the prospectus: "For example, for the Interest Period from and including February 15, 2006to and including March 14, 2006, CPIt will be the CPI for November 2005 and CPIt-12 will be the CPI for November 2004." So Nov 05 CPI correlates to March 15 2006 interest rates. Hence Jan 2009 CPI correlates to May 15, 2009 interest rates (and payment). I just checked my April OSM interest payment and it is correct to the penny at $0.0444 per sh. This is 0.0914% interest for CPI plus 2.00% fixed over 31 days. May 2009 OSM payment should be $0.04171 per sh. That is 2.03% interest over 30 days. To the poster that was a tiny bit off each time when comparing calculated vs. actual ISM/OSM payments - double check that you are using daily accrual instead of interest rate divided by 12. They apparently accrue interest daily on these, so periods with 30 days pay a tiny bit less than 31 day periods. And the mid-month payment is tricky - May payment includes the end of April, so the May payment period is only 30 days (in spite of May having 31 days). Anyone want to give SLM investor relations dept a call on hehalf of the ER forum class of ISM/OSM holders? Just ask them where da money is at.

So do you use a 360 day year, or 365 day to get the correct factor?

Ha

[FIRE'd@51]

FUEGO, my numbers agree with yours. I also have recieved no interest payment for May, and no ex-date for May has been posted anywhere I've looked. I tried calling the transfer agent for the common stock at an 800 number I got from SLM's web site, but couldn't get past the computer prompts to speak to a real person. I then called Vanguard (where I hold these gems in my IRA), and the guy I spoke with checked with an analyst there who said that there had been no news of SLM defaulting on the payments. He suspected it was some type of error, and that the money would probably just "appear" in my account. As clifp says, we are dealing with a firm who overpaid us one month last year, and then took the money back.

So far as I know SLM hasn't received any TARP money, so they shouldn't have lost the competent people who are able to calculate the correct interest payment.

[clifp]

I searched in vain for a contact number for Sallie Mae investor relations department. All I could find is form to fill out requesting copies of investor material. Which begs the question if you have access to the web, why do you need them to mail you copies of material that is already on the web (I know reading ARs etc is harder online) and if you don't have web access how do you contact them?

Update: Found an email address for an IR person, I am sending her note asking her to SEND US OUR MONEY or at least give an explanation

[haha]

We should form a Facebook Group- Dumbsh*ts who still hold Sallie Mae debt.

When I use 365 days, and the correct # of days in each month my payments come out either on the money or a very small amount off. Until May 2009.

Ha

[FUEGO]

I was using 365 days, haha. And if you start that facebook group, I'll join it. Although I'm still planning on waiting out the next 8 years to see whether I'm a dumbsh*t! And in the meantime theoretically collecting a nice coupon.

Interesting that the price on these keeps trending upwards in the face of not getting paid and having the payments you are supposed to receive shrink to a fraction of what they were recently. Maybe smart people think there will be larger inflation in the future??

And question for the group: when does not making an interest payment cross the line from making SLM look incompetent vs. making SLM default on their debt? 30 days late?

[FUEGO]

703-984-6743 is the number I have for investor relations. That is from the ISM listing at quantumonline. Oddly enough, I could not locate a contact number or email address at their Investor Relations website. Good job keeping investors in the dark SLM.

[FUEGO]

Soooo... I called the number I listed in the previous post. A live person picked up on the first ring. They transferred me to: Lewis Jimeno - direct line - 703-984-6710. I left Lewis a voicemail and asked him to call me back and tell me "where's da money at".

Oddly enough, the lady I spoke to said she had received a lot of calls about missing interest payments this morning! I guess that tends to happen when you fail to pay $294,000 in interest to your bondholders. And $25 of that is mine!

[clifp]

Quote:

Originally Posted by FUEGO And question for the group: when does not making an interest payment cross the line from making SLM look incompetent vs. making SLM default on their debt? 30 days late?

Good question the Prospectus on Quantum doesn't address non payment.

Personally, it is tempting to charge Sallie Mae the same late fee they charge student borrowers .

Ok I just got this email.

Quote:

We apologize for the inconvenience. There was a reporting problem in April between Sallie Mae and the NYSE, and the result was the NYSE did not receive the payment factors for the May 15, 2009 payment on your securities. We discovered the problem last night, May 19th, and have made the correction this morning, May 20th. The bank that is holding your securities should receive this information today from NYSE and be able to apply your payment accordingly. If you do not see your payment in your account in the next one to two days, please let me know.

Blame it on the NYSE... typical. Oh well at least my IRAs have a couple hundred more dollars.

[haha]

Quote:

Originally Posted by clifp Blame it on the NYSE... typical. Oh well at least my IRAs have a couple hundred more dollars.

Did this email come from Sallie Mae?

Ha

[youbet]

Sorry for joining the party late...... Noticed no ISM payment a couple of days ago but have been generally away from the computer doing some outdoors stuff.

Thanks to everyone for following up with SLM. These guys are something else. OTOH, as long as the payment shows up today or tomorrow, my plans are still to hang on, collect the coupon and see if SLM (through some miracle of financial wizardry) manages to pay off at PAR down the road.

Just as interesting will be if they're able to pay fully if inflation is high in the future. At today's prices, a yoy inflation rate of 6% would mean payments north of 20% if my calculations are correct.

[haha]

SLM as well as the debt held up fairly well today, even as our union of soviet socialist solons open debate on ending private student lending.

Who understands?

Ha

[FUEGO]

So this is the third time in two years that SLM botched interest payments? What, can they not set up a spreadsheet properly? We all seem to be able to calculate the payments here with a high degree of accuracy. Maybe they should allow us to service SLM bondholders. For the right fee of course. I mean they have freakin months between when BLS releases CPI data and when they actually have to pay it...

[clifp]

Quote:

Originally Posted by haha Did this email come from Sallie Mae? Ha

Yes it came from this guy. I won't add him to my speed dial but certainly to my outlook contact list for future screw ups.

Christopher Harper
Managing Director, Treasury Operations
12061 Bluemont Way, MDC V7212
Reston, VA 20190
w-(703) 984-6708
f-(703) 984-5664
Harper, Christopher <Christopher.J.Harper@salliemae.com>

[haha]

Thanks Cliff.

I heard from my broker this afternoon also- he said to expect the following payments this Friday, 5/22.

ISM--$0.042739
OSM-$0.041712

These are also what I got from my spreadsheet, within a penny or two.

The more I think about this, the more I don't like it. In effect, they gamed the float. If they were going to wait until 5/22 to pay interest due on 5/15 they should have paid us for an additional 7 days. Since this isn't the first time, maybe they have figured out that we are a bunch of disorganized small holders, that the trustee is asleep at the wheel, and that they can just help themselves to our money.

Ha

[FIRE'd@51]

Quote:

Originally Posted by haha I heard from my broker this afternoon also- he said to expect the following payments this Friday, 5/22. ISM--$0.042739 OSM-$0.041712 These are also what I got from my spreadsheet, within a penny or two.

I assume you mean a penny or two per 10,000 shares.

My spreadsheet gives:

ISM--$0.042737
OSM-$0.041709

Maybe they are paying us interest on the interest for the days that the payment is late.