CIT Strikes $3B Deal, Averting Bankruptcy

By Neal Colgrass,  Newser Staff
Posted Jul 19, 2009 10:46 PM CDT
Pedestrians past the the CIT Group Inc. building in New York, Wednesday July 15, 2009.   (AP Photo/Bebeto Matthews)
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(Newser) – CIT Group Inc. has made a deal for a $3 billion rescue package from bondholders to stay afloat, Reuters reports. The board of the lender, which was facing bankruptcy, struck a tentative agreement tonight. It includes high interest rates and apparently lacks long-term solutions, reports the Wall Street Journal. But the stopgap measure buys CIT time to stabilize by transferring assets to its bank in Utah—if the federal government agrees—and make debt-exchange offers to bondholders.

One analyst is not impressed: "Even if they put together a deal today and postpone a bankruptcy filing, CIT may be back in the same place in the not-too-distant future because unemployment rates, business-loan delinquencies and corporate default rates are climbing," he told the Journal. "The outlook for the next six months looks pretty rough for many banks, including CIT."