CIT Says IOU to Bondholders
(Updated stock prices throughout)
NEW YORK (
) --
CIT Group
(CIT) - Get Report
shares were down sharply Tuesday after saying in a regulatory filing that it will postpone interest payments on bonds maturing in 2067.
The bonds represent just a small fraction of more than $60 billion in debt obligations held by CIT, which has been struggling to stay out of bankruptcy. It became clear in July that the company was effectively shut out of the capital markets and would not be able to convince regulators to guarantee its debt, as it had done for large banks like
Citigroup
(C) - Get Report
and
Bank of America
(BAC) - Get Report
, as well as for giant lender
General Electric
(GE) - Get Report
.
While some analysts still see bankruptcy as a possibility, many observers believe
will be able to avoid that fate through a combination of debt-for-equity swaps and asset sales.
CIT shares were down 13.8% to $1.50 Tuesday, amid a wider market selloff.
CIT's shares, which have run up in recent days in concert with other highly distressed financial names like
AIG
(AIG) - Get Report
,
Freddie Mac
(FRE)
and
Fannie Mae
(FNM)
, were more than 6% lower in premarket trading Tuesday.
--
Written by Dan Freed in New York
.
