S&P cuts CIT Group to junk on liquidity concerns
NEW YORK, June 12 (Reuters) - Standard & Poor's on Friday cut its ratings on CIT Group (CIT.N) into junk territory, saying the commercial lender's conversion to a bank holding company did not benefit its liquidity as much as expected.
S&P cut CIT's counterparty credit rating three notches to BB-minus, three steps below investment grade, from BBB-minus, and left the company on review for further downgrade.
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 the Federal Deposit Insurance Corp has yet to approve its application.
"CIT's funding profile has not benefited from converting into a bank holding company to the degree we had expected, which has caused further erosion in liquidity available to repay maturing obligations and meet lending commitments," S&P said in a statement.
The company's liquidity position is likely to deteriorate further if it is unable to benefit from the FDIC's Temporary Liquidity Guarantee Program, which would allow it to issue debt that is guaranteed by the FDIC, and to make additional asset transfers to CIT Bank, S&P said. (Reporting by Karen Brettell; Editing by James Dalgleish)
