Moody's And S&P Cut CIT Group Ratings

NEW YORK (AP) — Moody's Investors Service cut its ratings for CIT Group Inc. to junk grade on Friday and Standard & Poor's Ratings Services also reduced its ratings after the diversified lender reported a wider-than-expected first-quarter loss.

CIT Group said Thursday that its lost attributable to common shareholders was $504.5 million, or $1.30 per share, far worse than the 46-cent loss Wall Street had anticipated.

Moody's said further declines in asset quality and higher average borrowing spreads are likely to result in additional operating losses through at least 2009. The ratings agency said the magnitude of the losses could jeopardize CIT's compliance with regulatory capital requirements.

To maintain compliance, Moody's said CIT may be forced to reduce new business activity or raise new capital under difficult market conditions.

Moody's lowered the company's senior unsecured rating to a junk grade "Ba2" from an investment grade "Baa2" and its short-term rating to "Not-Prime" from "Prime-2," among other ratings downgrades. Its ratings outlook is negative.

S&P lowered CIT Group's ratings Friday to a "BBB-" from "BBB." Its ratings remain investment grade.