CIT Taps Credit Lines: Kiss Another $7.3 Billion Goodbye

CNN Money is reporting CIT taps $7.3 billion credit line.

Commercial and consumer lender CIT Group Inc. said Thursday it tapped its $7.3 billion credit lines to repay debt and finance its commercial lending and is seeking additional funding sources as access to capital has dried up.

CIT Group said it cannot get capital from other sources amid continued deterioration of the credit markets. Aside from looking for new funding, CIT Group said it would also consider selling non-strategic assets and business lines to help raise cash...

Earlier this week, both Moody's Investors Service and Standard & Poor's cut some of CIT Group's credit ratings because of the company's reduced financial flexibility due to the credit market turmoil. On Wednesday, Fitch Ratings put its ratings for CIT on review for possible downgrade. Moody's cut CIT Group's issuer rating, while S&P cut its counterparty rating. Both the ratings remained investment grade.

CIT Daily Chart



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Bloomberg is reporting a "Disruption" at CIT

CIT drew on its $7.3 billion of emergency credit lines today after credit-rating downgrades left it unable to finance itself with commercial paper, or debt due in nine months or less. Chief Executive Officer Jeffrey Peek said the "protracted disruption" in capital markets may also force the New York-based company to sell assets.

"Once you tap your backup bank lines and the credit crunch is still as bad as it is, you're on a slippery slope" with credit ratings companies, said Richard Hofmann, an analyst at CreditSights Inc. in New York.

The company's $500 million of 5.6 percent notes due in 2011 slumped to as low as 68 cents on the dollar, according to Trace, the Financial Industry Regulatory Authority's bond-pricing service. The notes last traded at 93 cents on the dollar on Feb. 26. The yield widened 15.7 percentage points more than Treasuries with similar maturities, from 4.7 percentage points.

Kiss another $7.3 Billion Goodbye

Somehow Moody's and the S&P consider CIT to be investment grade. I sure don't. And whoever lent CIT $7.3 billion (or whatever portion thereof) can likely kiss it goodbye.

Comments

[srichter77:]

You're a moron. The credit markets are at an unprecedented level of fear and disruption, and you blame this Co? They have been successfully conducting business, conservatively, for over 100 years. It's not their fault that the bond market has essentially failed, which isn't surprising in itself given the number of uninformed fearmongering fools like you.

2008 Mar 20 11:44 PM

[User 166803:]

Yikes it sure looks like it is going to get worse before it gets better...whats next???

2008 Mar 22 04:10 AM

[scabello:]

i agree. you are an idiot. there is no liquidity out there; they hold solid assets or assets that might be worth 90 cents on the dollar, but nobody wants to buy them. cant even sell them for 70 or 80 cents and to sell for 20 cents is just stupid -- it is basically digging their own grave.

2008 Mar 24 11:10 AM

[Dan Jacome:]

They are in the hole, just like FMD. Wrong place at the wrong time, it happens when perception trumps reality, & that's how we lost Mother Bear.

2008 Apr 10 09:13 PM