Imark
Forumer storico
Il 2 giugno 2008, ulteriore rating action delle agenzie, evidentemente conscie come noialtri del problema di fondo... lo riportavo con commento.
Arriva il downgrade di Moody's ... che lascia addirittura i rating in creditwatch (neanche in outlook negative) in vista di un ulteriore possibile downgrade di breve ... circostanza piuttosto inusuale e che la dice lunga sulla precarietà della situazione di CIT...
Moody's downgrades CIT to Baa1; long-term rating remains under review
New York, May 29, 2008 -- Moody's Investors Service downgraded the senior unsecured rating of CIT Group, Inc. to Baa1 from A3 and affirmed its Prime-2 short-term rating. CIT's long-term ratings remain on review for possible downgrade.
Moody's said the downgrade of the long-term rating to Baa1 reflects CIT's business profile, giving consideration to the business transitions now underway at the firm and the associated execution risks. In recent quarters, CIT has had to confront difficult operating and funding conditions resulting from deteriorating performance in its home lending business and broader credit market illiquidity. This has led to a weaker credit profile as reflected in the Baa1 rating.
In response to these issues, CIT has implemented a number of tactical measures to preserve liquidity and capital levels after recording losses in each of the past four quarters related to its mortgage business. CIT raised approximately $1.6 billion in new common and hybrid equity during the first half of 2008, drew its $7.3 billion bank facilities, sold $2.5 billion of unencumbered assets, and created incremental liquidity sources of approximately $2.5 billion.
This provided the firm needed cash liquidity to meet debt maturities and continue franchise-preserving levels of new finance asset originations. In Moody's view, CIT has adequate sources of liquidity to provide for its needs over the next twelve months.
CIT's actions have also provided the firm additional time and financial flexibility to pursue initiatives which are more strategic in nature but that require a longer gestation period. (
) CIT is expected to scale its funding and capital levels to support its core commercial finance businesses, while concurrently pursuing exit strategies for its non-core businesses.
The Baa1 rating anticipates that CIT will maintain a sufficient liquidity cushion to allow it to successfully bridge its current difficulties and to enable it to transition its scale, focus, and funding profile. However, continuing uncertainty regarding the potential magnitude of cumulative losses in CIT's mortgage portfolio has been a significant impediment to the firm re-establishing solid footing in the credit markets.
In recognition of the execution risks associated with CIT's plans to overcome funding and liquidity issues, the Baa1 rating remains on review for possible downgrade. Should the firm's key initiatives relating to securing a strategic funding partner and containing mortgage business risk prove to be successful, as expected, the ratings would likely be confirmed. Absent this, as noted above, the mortgage portfolio could continue to limit the company's ability to re-establish its access to the unsecured funding markets, putting further negative pressure on the rating.
In addition to the challenges highlighted above that led to the downgrade, the Baa1 rating also incorporates Moody's view that CIT's profitability will be constrained in future periods by higher funding costs. We believe that profitability, as determined by return on average managed assets, is likely to measure at the lower end of the firm's historical range. Additionally, profitability in recent quarters has been sustained in part by lower loss provisioning than historical norms; thus, unexpected deterioration in asset quality that results in accelerated provisioning is an additional risk factor to earnings strength.
On the other hand, CIT's ratings continue to be supported by its strong franchise positioning in commercial finance, including leading businesses in trade finance, vendor finance, corporate finance, aircraft finance and small business lending. Some of these businesses are exposed to a high degree of cyclical volatility, such as aircraft finance, but the balance and breadth of CIT's business activities provides for some stabilizing influence to overall results. The ratings also recognize CIT's experienced operating management and its commitment to maintaining a prudent balance between yield and underwriting considerations.
Arriva il downgrade di Moody's ... che lascia addirittura i rating in creditwatch (neanche in outlook negative) in vista di un ulteriore possibile downgrade di breve ... circostanza piuttosto inusuale e che la dice lunga sulla precarietà della situazione di CIT...
Moody's downgrades CIT to Baa1; long-term rating remains under review
New York, May 29, 2008 -- Moody's Investors Service downgraded the senior unsecured rating of CIT Group, Inc. to Baa1 from A3 and affirmed its Prime-2 short-term rating. CIT's long-term ratings remain on review for possible downgrade.
Moody's said the downgrade of the long-term rating to Baa1 reflects CIT's business profile, giving consideration to the business transitions now underway at the firm and the associated execution risks. In recent quarters, CIT has had to confront difficult operating and funding conditions resulting from deteriorating performance in its home lending business and broader credit market illiquidity. This has led to a weaker credit profile as reflected in the Baa1 rating.
In response to these issues, CIT has implemented a number of tactical measures to preserve liquidity and capital levels after recording losses in each of the past four quarters related to its mortgage business. CIT raised approximately $1.6 billion in new common and hybrid equity during the first half of 2008, drew its $7.3 billion bank facilities, sold $2.5 billion of unencumbered assets, and created incremental liquidity sources of approximately $2.5 billion.
This provided the firm needed cash liquidity to meet debt maturities and continue franchise-preserving levels of new finance asset originations. In Moody's view, CIT has adequate sources of liquidity to provide for its needs over the next twelve months.
CIT's actions have also provided the firm additional time and financial flexibility to pursue initiatives which are more strategic in nature but that require a longer gestation period. (
The Baa1 rating anticipates that CIT will maintain a sufficient liquidity cushion to allow it to successfully bridge its current difficulties and to enable it to transition its scale, focus, and funding profile. However, continuing uncertainty regarding the potential magnitude of cumulative losses in CIT's mortgage portfolio has been a significant impediment to the firm re-establishing solid footing in the credit markets.
In recognition of the execution risks associated with CIT's plans to overcome funding and liquidity issues, the Baa1 rating remains on review for possible downgrade. Should the firm's key initiatives relating to securing a strategic funding partner and containing mortgage business risk prove to be successful, as expected, the ratings would likely be confirmed. Absent this, as noted above, the mortgage portfolio could continue to limit the company's ability to re-establish its access to the unsecured funding markets, putting further negative pressure on the rating.
In addition to the challenges highlighted above that led to the downgrade, the Baa1 rating also incorporates Moody's view that CIT's profitability will be constrained in future periods by higher funding costs. We believe that profitability, as determined by return on average managed assets, is likely to measure at the lower end of the firm's historical range. Additionally, profitability in recent quarters has been sustained in part by lower loss provisioning than historical norms; thus, unexpected deterioration in asset quality that results in accelerated provisioning is an additional risk factor to earnings strength.
On the other hand, CIT's ratings continue to be supported by its strong franchise positioning in commercial finance, including leading businesses in trade finance, vendor finance, corporate finance, aircraft finance and small business lending. Some of these businesses are exposed to a high degree of cyclical volatility, such as aircraft finance, but the balance and breadth of CIT's business activities provides for some stabilizing influence to overall results. The ratings also recognize CIT's experienced operating management and its commitment to maintaining a prudent balance between yield and underwriting considerations.
