S&P Downgrades CIT Group To Junk, May Cut Again

NEW YORK (AP) — Standard & Poor's Ratings Services on Friday lowered its ratings on commercial finance and leasing provider CIT Group Inc. to non-investment grade status, citing its available liquidity and ability to repay debt.

S&P cut the ratings, including CIT's counterparty credit rating, to "BB-/B" from "BBB-/A-3". It also lowered its ratings on CIT's hybrid capital instruments to "CCC+" from "B+."

In addition, it placed the ratings on CreditWatch with negative implications, meaning it could cut the ratings further after reviewing them.

"The downgrade reflects our assessment that CIT's funding profile has not benefited from converting into a bank holding company to the degree we had expected," said Standard & Poor's credit analyst Rian M. Pressman. He noted the Federal Deposit Insurance Corp. is still considering its application, and CIT has not yet been granted access to the temporary liquidity guarantee program.

Pressman said there has been limited benefit from transfers of loans to CIT Bank. "We believe this has reduced CIT's funding flexibility and forced it to increase its reliance on less-attractive funding sources, including secured borrowings and net portfolio run-off," he wrote.