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CIT bondholders want debt for new debt swap-source

Fri Jul 17, 2009 11:56am EDT

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NEW YORK, July 17 (Reuters) - Many of CIT Group Inc's CIT.N largest bondholders are pursuing a "debt for new debt" exchange on Friday, as the large lender to small and mid-sized businesses teeters on the brink of collapse, a person familiar with the matter said.

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"A debt for equity exchange is not a real consideration," the person said. "The basis for our bondholders' meeting was to discuss debt for new debt exchange."

About 10 to 15 bondholders, each with at least $500 million of exposure, on Thursday participated in an emergency call. Among the participants was Pacific Investment Management Co, the unit of German insurer Allianz SE (ALVG.DE) led by prominent bond fund manager Bill Gross, the person said.

The person requested anonymity because the conference call was not open to the public. (Reporting by Jennifer Ablan; Editing by James Dalgleish)

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