NEW YORK, March 19 Moody's Investors Service
cut its ratings on CIT Group (CIT.N), and Fitch Ratings on
Wednesday said it may cut them, citing challenges the
commercial finance company faces in accessing reasonably priced
"The current credit market environment is challenging the
strength of CIT's liquidity profile to a degree not previously
experienced by the firm," Moody's said in a statement late on
CIT's ability to source traditional unsecured funding at
economically viable prices has been materially constrained,
Fitch said on Wednesday.
Moody's cut CIT's long term ratings one notch to "A3," the
seventh highest investment grade, and said it may cut them
again. Fitch may cut the company's issuer default rating from
"A," the sixth highest ranking.
In addition, Moody's cut CIT's short term rating, which is
likely to make it more challenging for the company to sell
"Although CIT successfully renewed maturing committed
conduit facilities in 2007, access to the term ABS markets is
constrained," Moody's analyst Mark Wasden said in the
statement. "Our review will focus on the company's ability to
respond to its funding challenges while managing potential
dilution to its profitability and franchise strength."
CIT has traditionally relied on accessing funds by selling
securitizations of its assets, in addition to unsecured debt.
Fitch said it expects CIT will need to use alternative
sources of funding and liquidity, which include unsecured,
committee bank lines totally $7.3 billion.
If the company is successful in raising funds required
relative to its asset base, its rating will likely be affirmed
with a negative outlook, Fitch said.
The cost to insure CIT's debt with credit default swaps has
jumped to 1076 basis points, or $1.07 million per year for five
years to insure $10 million in debt, from 634 basis points at
the beginning of March, according to Markit Intraday.
(Reporting by Karen Brettell;)