Fitch cuts CIT ratings deeper in junk territory

NEW YORK, July 8 (Reuters) - Fitch Ratings cut its ratings on CIT Group Inc CIT.N deeper into junk territory on Wednesday, citing concerns over the commercial lender's funding sources as the company awaits a decision on whether it can get access to government funds.

Fitch cut CIT's long term ratings two notches to BB-, three steps below investment grade, from BB+, and said it may cut them again.

CIT, which lends to Main Street and small- and medium-sized businesses, converted to a bank holding company in the fourth quarter to qualify for U.S. government funds, but its application for funding under the Temporary Liquidity Guarantee Program (TLGP) has yet to be approved.

"If CIT's application is not approved over the very short term, Fitch would likely lower CIT's ratings to levels that would indicate that default is a real possibility," the rating agency said in a statement.

"Conversely, if the company's TLGP application is approved and CIT is able to issue FDIC guaranteed debt, Fitch believes the near-term liquidity pressures could be addressed, allowing CIT to execute on its ongoing business plan," Fitch said.

CIT has $7.4 billion in debt maturing by the end of the first quarter of 2010, analysts at CreditSights said on Wednesday. (Reporting by Karen Brettell; editing by Jeffrey Benkoe)