Financial Services

Return to Article

CIT Group Plunges on Liquidity Concerns

TSC Staff

Shares of CIT Group(CIT - Cramer's Take - Stockpickr) tumbled more than 44% Thursday, after the commercial financier said it had drawn on a $7.3 billion line of credit.

The company said it will use the proceeds to repay debt maturing this year, including commercial paper, and to fund its core commercial franchises. It said it is seeking additional funding sources and exploring the sale of "non-strategic assets."

"Our decision today is a result of the protracted disruption in the capital markets as well as recent actions by the rating agencies," said Chairman and CEO Jeffrey Peek in a company statement. "It provides us with added flexibility and ensures that our clients have the financing they need to operate and grow their businesses successfully. We are actively positioning CIT to maximize value by optimizing our business portfolio and sizing our company to market conditions."

CIT's troubles are the latest in a string of problems for financial sector companies in the choked credit markets. Thornburg Mortgage(TMA - Cramer's Take - Stockpickr) has been decimated over the last month, as it has been beset by margin calls, and Carlyle Capital, a fixed-income investment manager run by an affiliate of private equity firm the Carlyle Group, also was run into the ground as lenders demanded their money back as mortgage-related collateral plummeted in value.

CIT shares, which dipped as low as $6.45, more recently were trading at $8.55, a decline of 26.6%.