NEW YORK (
sold off sharply Wednesday in heavy trading, after a big run-up Tuesday.
Shares were down nearly 9% to $1.67 just over an hour after the open. Volume of 53 million shares in late morning trading was on pace to exceed the three-month average of 87 million shares. Shares of
, two other troubled financial companies that saw big rallies Tuesday, were also down by more than 3% each.
No immediate reason for the selloff could be determined.
CIT has been in the headlines ever since 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
Bank of America
, as well as for giant lender
The lender staved off bankruptcy with the emergency loan it secured in late July from a group of hedge funds and giant bond fund manager PIMCO, and convinced bondholders to take less than they were owed on a subsequent debt exchange. While some analysts still see bankruptcy as a possibility, many observers believe CIT will be able to avoid that fate through a combination of debt-for-equity swaps and asset sales.
Still, analysts see the equity as having little value as they assume current shareholders would be heavily diluted in such a scenario.
Written by Dan Freed in New York