Obbligazioni societarie CIT Group, SLM, GMAC e le finanziarie USA che (forse) si salveranno diventando banche

[Imark]

Il 4 novembre 2008, un altro commento (non mio) ad una news positiva: si intravede il possibile soccorso dello stato ...

Oggi CIT ha ottenuto il prestito 500mln $ da WellsFargo, inoltre pensa di poter usufruire di aiuti di stato americano ( non e' ancora ben chiaro se cedendo quote di capitale o solo con rifinanziameto di commerical papers).
Non e' out of woods, rischio resta elevato ma e' un buon passo in avanti per evitare fallimento

Ed il 13 novembre 2008, la notizia che CIT Bank, società del gruppo, faceva richiesta per divenire holding bancaria (così guadagnando una serie di prerogative) e CIT chiedeva l'accesso ai fondi TARP

CIT diventa una banca, con tutte le protezioni relative , riskio liquidita' a questo punto si dovrebbe eliminare ...good x bond holders...

CIT Group Inc. (NYSE: CIT), a leading commercial finance company, today announced that it has applied with the U.S. Federal Reserve Board of Governors to become a bank holding company. Concurrently, CIT Bank, a
Utah-based wholly-owned subsidiary of CIT, filed an application to convert its charter from an industrial bank to a Utah State Bank. CIT has also submitted an application to participate in the U.S. Treasury’s Capital
Purchase Program (TARP), conditional upon being granted status as a bankholding company by the Federal Reserve.

These actions are intended to provide CIT with expanded opportunities for funding and greater access to capital. They will permit CIT to continue its current business activities and increase its deposit-taking
capabilities, which will provide further stability and diversity to CIT’s long-term funding model.

“As the bridge between Wall Street and Main Street, CIT remains one of thefew significant sources of liquidity for small and mid-sized businesses who are struggling to survive in today’s challenging environment,” said
Jeffrey M. Peek, Chairman and CEO. “Our commitment to the success and continued viability of middle market businesses has not wavered throughoutour 100 year history. The middle market is the cornerstone of the U.S.economy, providing more than 32 million jobs nationwide and generating more than $6 trillion in annual revenue. As a bank holding company CIT would be well-positioned to ensure the continued flow of liquidity directly to main street businesses and entrepreneurs."

While CIT has been engaged in discussions with Federal and State regulators for several weeks, CIT cannot assure that it will become a bank holding company or that it will participate in the TARP program.

 

[Imark]

Scambio di commenti fra (g)old_boy e me circa la possibile assegnazione di fondi TARP a CIT: ne riporto le battute principali insieme con il commento di Moody's sulla situazione.

Beh mi sembra che il discorso di Paulson ieri sia stato esemplificativo, il resto della tarp non va a distressed assets(mortgage) ma a finanziare le consumer credit loans agencies e dato che cit e' una delle piu' grandi, oserei affermare che ha buone prob di essere approvata......no???

E' da seguire ... anche io sono curioso di vedere quali criteri saranno adottati verso il settore delle finanziarie. Non faccio pronostici, non mi sento in grado...

No comment neanche da parte delle agenzie di rating. Pur convenendo sul fatto che la concessione dello status di holding bancaria aiuterebbe non poco sul piano del funding, Moody's si premura di rilevare come tale concessione a non possa dirsi certo allo stato delle cose (non ci sono automatismi applicabili). Per ora i rating di CIT restano in creditwatch negativo...

Moody's comments on CIT's bank holding company application

New York, November 13, 2008 -- Moody's Investors Service commented that CIT Group Inc.'s application with the U.S. Federal Reserve to become a bank holding company has no immediate implications for the firm's ratings (Baa1 senior unsecured; Prime-2 short-term). CIT's ratings remain on review for possible downgrade.

In connection with its application for bank holding company status, CIT said it also applied to convert CIT Bank, its Utah industrial loan corporation, into a Utah state bank. The firm also applied for capital funds from the U.S. Treasury's Troubled Asset Relief Program (TARP), contingent on approval of its bank holding company application.

CIT's conversion to a bank holding company, should it be approved, could provide CIT access to liquidity sources that are not available to the firm today. Though CIT has successfully put in place several funding alternatives to traditional unsecured debt during the past several quarters, continued constraints in the debt capital markets have challenged the firm's ability to maintain an adequate liquidity cushion in the future. Moody's believes CIT must have an operable plan to maintain adequate liquidity over a minimum 12-month horizon as a necessary condition to preserve its current ratings.

"Successful conversion to a bank holding company could aid CIT in managing its funding challenges, which could be supportive of the firm's current ratings," said Moody's analyst Mark Wasden. Moody's believes bank holding company status could also be the basis for CIT achieving a more stable long-term funding profile to support its well-positioned business lines. Moody's noted that the approval of CIT's application is not assured.

During its continuing ratings review, Moody's will assess the ability of CIT to successfully meet the requirements for approval of its bank holding company application, its operating and financial strategies post conversion including those relating to liquidity and capital, and the implications of these plans for the firm's creditors -- in particular, the potential that current CIT Group level creditors could become structurally subordinated to CIT Bank level creditors. Moody's will also consider the adequacy of CIT's financial and operating prospects, as well as its liquidity position, should its application not be approved. Moody's review will also incorporate analysis of trends in CIT's asset quality and borrowing costs in terms of their effect on the firm's profitability.

CIT Group Inc. is a global commercial finance company located in New York City and Livingston, New Jersey. CIT reported total assets of $81 billion at September 30, 2008.

 

[Imark]

Il 23 novembre 2008 riportavo per completezza un notizia prima sfuggitami. E' la stessa CIT Group che chiedeva lo status di holding bancaria, non solo la banca (ma con diverso status) del gruppo, CIT bank

Ha chiesto di diventare una banca... ma in queste settimana ci sarà la fila delle finanziarie che chiedono di diventare banche: più numerose saranno quelle accettate, più soldi bisognerà stanziare per il TARP...

Quante ne accetteranno ? Ed in virtù di quali criteri ? E' per questo che vado dicendo da tempo (se segui il 3D) che alla fine la politica USA dovrà decidere cosa fare delle finanziarie....

Mi era sfuggita questa info: pare che CIT, avendo anch'essa fatto richiesta di divenire holding bancaria per accedere ai fondi TARP, abbia dichiarato ad inizio mese che intende collocare nuove azioni e con il ricavato ripagare anticipatamente parte del debito.

Va appurato cosa sia stato effettivamente fatto.

Ove sia stata formulata una tender offer, va valutata la possibilità di aderire...

Interessante l'osservazione fatta da un investitore professionale ascoltato da Bloomberg in merito alla possibilità per le finanziarie di divenire banche per mettersi in salvo nella situazione attuale.

Se la si accordasse con manica larga, i fondi TARP, già inadeguati ad avviso di molti analisti per consentire il salvataggio del sistema bancario, sarebbero spartiti fra un numero ancora più ampio di beneficiari, diluendone l'effetto. La conclusione è quella per cui dovrà venire una decisione (di fonte politica) sul destino delle finanziarie...

GMAC Applies for Status as Bank, Begins Debt Swap (Update5)

By Linda Shen and Caroline Salas

Nov. 20 (Bloomberg) -- GMAC LLC, the largest lender to General Motors Corp. car dealers, applied for status as a bank holding company so it can get access to the Treasury’s $700 billion rescue fund for the financial industry.

The lender also began an exchange offer for $38 billion of notes issued by the company and its Residential Capital LLC home- lending unit to reduce outstanding debt levels, Detroit-based GMAC said today in a statement.

GMAC joins money-losing commercial lender CIT Group Inc. in trying to shore up its finances to gain bank status. That may help GMAC quell doubts about its survival after home foreclosures pressured the mortgage unit and GM’s auto sales plummeted to the worst level since 1945. GMAC may also be able to obtain U.S. government guarantees on new debt as a bank.

“If you let this many people participate, the benefit gets so diluted you haven’t done a lot of good,” said Peter Sorrentino, a senior portfolio manager at Cincinnati-based Huntington Asset Advisors. “You can’t save everybody. That’s the hard call.”

The debt restructuring is the second in five months for GMAC and ResCap as they try to stave off bankruptcy. GMAC has about $61 billion of unsecured long-term debt outstanding, according to a regulatory filing. The company has recorded total losses of $7.9 billion from mid-2007 through last quarter. Jennifer Zuccarelli, a Treasury spokeswoman, declined to comment.

Notes Gain

GMAC’s $2 billion of 7.25 percent notes due in 2011 fell 5 cents, or 11 percent, to 40 cents on the dollar at 4 p.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The debt yields about 58 percent, or 57 percentage points more than similar-maturity Treasuries, Trace data show.

ResCap’s $1.2 billion of 6.375 percent notes due in 2010 rose 3 cents to 10 cents on the dollar, according to Trace. The debt yields about 255 percent.

If the exchange offers aren’t completed by the end of the year, “there is a significant risk that GMAC will trigger a default under certain of its secured and unsecured funding and credit facilities,” the company said in a filing today.

GMAC has been shut out of some credit markets and last month said it might raise “significant amounts of capital” as part of an attempt to become a bank holding company and swap some of its debt. Standard & Poor’s said Nov. 7 that GMAC and ResCap were facing a “dire situation.”

S&P cut its rating today on the senior unsecured debt of GMAC and ResCap because the exchange will pay less than face value to some bondholders. GMAC was reduced to CC from CCC and ResCap’s notes were lowered to C from CC.

‘Increased Flexibility’

“As a bank holding company, GMAC would obtain increased flexibility and stability to fulfill its core mission of providing automotive and mortgage financing to consumers and businesses,” the statement said.

GMAC must raise $2 billion in capital from third parties or existing investors to qualify for bank status under the Tier 1 capital ratio, a measure of a lender’s ability to absorb losses, the filing said. The company said it was “in discussions” with the Federal Deposit Insurance Corp. about participation in its debt-guarantee program.

GMAC said it doesn’t expect to be able to participate immediately, and that “even if we become a bank holding company and consummate the offers, there can be no assurance that our request to participate” will be approved by the FDIC.

GMAC Swap

GMAC is offering to buy back notes for as little as 55 cents on the dollar in cash. Alternatively, holders can swap their debt for an equivalent amount of senior notes and preferred stock. ResCap holders will tender at a rate of as little as 20 cents on the dollar. The

Owners of GMAC notes can swap for a combination of new senior bonds with the same interest rate and maturity as their existing debt and new 5 percent perpetual senior preferred stock of a wholly owned subsidiary of GMAC. Preferred shares typically count as capital on a bank’s balance sheet. Holders can also opt for cash. Those owning notes maturing in 2031 will also get 8 percent subordinated notes due in 2018 as part of the exchange.

ResCap noteholders will get a combination of new senior and subordinated debt for as little as 50 cents on the dollar. If they choose the cash option, they’ll receive as little as 20 cents on the dollar. For ResCap’s 8.5 percent notes maturing in 2010, which were issued at as part of the exchange in June, holders would receive 75 cents on the dollar’s worth of newly issued 7.5 percent senior GMAC notes due in 2013 or 50 cents in cash.

SmartNotes

The debt exchange applies only to institutional investors, said GMAC spokeswoman Gina Proia. As of September, the company had $14.6 billion of outstanding SmartNotes, bonds that were sold to retail investors, and $3.9 billion of demand notes, according to today’s filing.

GM sold 51 percent of GMAC to a group led by buyout firm Cerberus Capital Management LP in 2006, retaining minority control. Democratic leaders in U.S. Congress today blocked immediate action on loans for automakers and ordered them to make a case for the aid next month.

More than 100 lenders, insurers and financial companies have applied to the government for at least $65.8 billion in funds through the Troubled Asset Relief Program, according to data compiled by Bloomberg. At least 57 received preliminary approval for $51.5 billion, while 48 more awaited word on requests totaling more than $14 billion.

CIT’s Plan

CIT said earlier this month it would sell shares and buy back debt to improve its ability to absorb losses in order to become a bank.

The Treasury’s $700 billion rescue plan for the financial industry, announced in October, includes $125 billion allocated to the nine largest U.S. banks and $125 billion originally earmarked for smaller regional lenders.

Some insurers and finance companies are planning to convert to banks to become eligible for the funds. Totals may be higher because disclosures of applications are voluntary, and some smaller institutions are omitted.

GMAC said earlier this month that it sold a reinsurance business to Maiden Holdings Ltd. and agreed to sell two insurance units to the firm as it seeks to avoid a cash squeeze.

 

[Imark]

Stessa data, il commento di Fitch...

Qualche ulteriore indicazione in questo commento di Fitch sui programmi di CIT. C'è anche uno swap su bond considerato non distressed dall'agenzia...

Chi è interessato, è bene che vada anche sul loro sito a cercare di seguire la vicenda ...

Fitch Comments on CIT's Capital Raising Plan and BHC Application
17 Nov 2008 11:43 AM (EST)

Fitch Ratings-Chicago-17 November 2008: CIT Group Inc. (CIT), as part of its previously announced application to become a bank holding company (BHC), has announced additional capital raising initiatives designed to facilitate this transition. Fitch is maintaining CIT's Long-term Issuer Default Rating (IDR) at 'A-' and Short-term IDR at 'F2', and the Rating Outlook remains Negative. All other ratings remain unaffected at this time.
Fitch views CIT's initiative to become a BHC as a long-term positive; however, if successful, it is unlikely to translate into a near-term rating positive. Rather, obtaining BHC status will likely serve to mitigate downgrade risk for the company.

While BHC status opens the company up to greater access to federal banking aid such as the FDIC's Temporary Liquidity Guarantee Program (TLG) and allows CIT to greatly increase its use of deposit funding, these actions will likely serve to maintain CIT's current ratings. Fitch is mindful that CIT's fundamental operating performance will remain pressured due to weakening macro-economic factors. In Fitch's view, if the company is not able to achieve BHC status, Fitch would anticipate lowering CIT's IDR rating.

In order to meet Federal Reserve regulatory capital requirements to become a BHC, CIT has announced a number of capital raising initiatives. First, the company is offering to accelerate conversion of its $690 million current outstanding principal of convertible debt for equity. Second, the company is seeking to convert up to $1.5 billion of current senior debt for a combination of cash and qualifying subordinated debt. Fitch is not considering the senior note exchange as a distressed debt exchange. CIT is also pursuing capital up to $2.5 billion of preferred equity under the Treasury's TARP program as well as a public or private offering of common stock. Importantly, the senior note exchange is conditioned upon receiving BHC approval and a Treasury preferred investment. Taken together and if successful, CIT would exceed applicable regulatory capital requirements for a BHC.

While Fitch would view the approval of CIT's application positively, particularly given the strengthened capitalization, several rating outcomes could emerge, including differentiating the ratings between the newly formed bank holding company and CIT Bank. Accordingly, Fitch will review the company's legal entity structure and proposed business model under the construct of a bank holding company and assess their impact on current ratings. Fitch believes that government programs designed to stabilize and strengthen U.S. banks would have put CIT at a competitive disadvantage with respect to securing cost-efficient financing in the current environment. Fitch would view positively a growing reliance on deposits to finance bank eligible assets and a manageable level of unsecured debt to support holding company needs, the latter of which depends on CIT's ability to transfer assets into the bank and shed bank ineligible assets

 

[Imark]

Il 23 dicembre 2008, Researcher riportava la notizia del prestito del tesoro USA...

CIT +1% A WallStreet. Via libera al prestito del Tesoro Usa da 2,33 mld di dollari

Websim - 23/12/2008 16:03:03

Cit (CIT.N) guadagna l'1% a Wall Street il. Il maggiore operatore indipendente di crediti commerciali ha comunicato di aver ricevuto l'autorizzazione preliminare dal dipartimento del Tesoro americano per ricevere 2,33 miliardi di dollari, oltre ad aver ottenuto il via libera della Fed al cambio di status. Di conseguenza, il gruppo diverrà una holding bancaria.

La richiesta di cambiamento di status avanzata da Cit è in linea con quelle presentate da altre società finanziarie, come American Express, allo scopo di raccogliere depositi, quindi rafforzare il proprio capitale, e soprattutto ad accedere ai fondi del Tarp, il piano salva finanza da 700 miliardi di dollari.

 

[Imark]

E arriviamo ad oggi: la domanda che in più di uno ci ponevamo, ossia se diventare holding bancaria comporti un automatico salvataggio di chi sia stato ammesso a quello status, resta un interrogativo ancora privo di risposte certe (vedasi anche, fra l'altro, la situazione di GMAC).

Nei giorni scorsi, S&P, portando il rating corporate di lungo termine di CIT sui livelli minimi dell'IG, sembra porsi la medesima domanda.

CIT ha fatto richiesta per l'ammissione al TLGP, ma la sua domanda è ad oggi ancora pendente, mentre i risultati trimestrali continuano a segnalare il deterioramento in essere nei settori dell'erogazione di finanziamenti in cui è ancoara attiva CIT Group.

La società conta di restare in perdita, nel migliore dei casi, fino al Q1/2010, mentre i costi di funding restano alti.

In positivo, la circostanza per cui la FED ha autorizzato il trasferimento di "loan assets" (i finanziamenti erogati a studenti e muniti di garanzia governativa) a CIT Bank (che suppongo possa offrirli come collaterale alla stessa FED per ottenere liquidità a termine).

Resta chiaro tuttavia dal commento come si sia lontani dal reperimento di un modello di funding soddisfacente e dipendente in larga misura dai depositi che una holding bancaria è (teoricamente) in grado di raccogliere.

E nel mentre la recessione in essere incide in maniera negativa, fra l'altro, sul valore degli asset di CIT.

CIT Group Inc. Ratings Lowered To 'BBB-/A-3' From 'BBB/A-3'; Outlook Negative

NEW YORK (Standard & Poor's) April 24, 2009--Standard & Poor's Ratings Services said today that it lowered its ratings, including its counterparty credit rating, on CIT Group Inc. to 'BBB-/A-3' from 'BBB/A-3'. The outlook is negative.

"The rating action reflects weaker-than-expected first quarter and prospective earnings due to increasing provisions needed to cover weakening asset quality, particularly in its corporate finance segment.

The rating also incorporates our view that CIT's funding flexibility continues to be somewhat challenged, given that its application for the FDIC's Temporary Liquidity Guarantee Program (TLGP) is still pending. This concern is partially offset by the Federal Reserve's approval of the initial phase of its 23A waiver, which enabled the movement of government-guaranteed student loan assets to CIT Bank Ltd.

Lastly, the action also reflects the risks inherent in CIT's transition from a primarily wholesale-funded finance company to a commercial bank, especially considering the continued difficult credit market and volatile economic conditions," said Standard & Poor's credit analyst Rian Pressman.

This action follows CIT's announcement that it lost $504.5 million (including preferred stock dividends) in first-quarter 2009, primarily from a significant build-up of its provisions and elevated funding costs.

Management also announced that it was unlikely that CIT would be profitable until first-quarter 2010 at the earliest, which, in our view, did not support rating. (CIT has lost money every quarter since second-quarter 2007.) Net charge-offs (NCOs) as a percentage of average commercial finance receivables was 2.78%--at the high end of our expectations. NCOs will continue to rise as CIT's commercial borrowers grapple with the recession and recovery rates on secured loans slip further.

Also factored into the rating is our view that CIT's inability to access TLGP during the first four months of 2009 has reduced the company's funding flexibility somewhat and constrained loan originations.

These concerns are partially offset by the Federal Reserve's approval for CIT to begin transferring loan assets to CIT Bank.

We believe that this positive development will allow for the gradual release of liquidity at the holding company level, by virtue of the deposit raising and related incremental lower funding costs that would be available as assets are funded by CIT Bank. Our view of the pace at which CIT will be able to fully realize CIT Bank's potential is tempered somewhat by the risks inherent in the transition from a primarily wholesale-funded finance company, especially in light of the continued tight credit market and difficult economic conditions.

The negative outlook reflects our view that, given the global recession and credit market turmoil, CIT's asset quality and funding flexibility could weaken in the future to a level that is inconsistent with the current rating.

It also reflects the risk associated with CIT's transition to a commercial banking model. Successful execution of this commercial banking strategy may stabilize the rating and result in a more favorable outlook, provided that profitability, asset quality, and capital remain acceptable for its ratings level.

"We may lower the ratings if CIT is ultimately unable to access the TLGP program; fails to successfully execute its commercial banking strategy; or, if profitability, asset quality, and/or capitalization deteriorate appreciably beyond our current expectations," Mr. Pressman added

 

[lorixnt2]

Beh, ad occhio mi sembra sia quella.
L'unica cosa che mi sento di rilevare è il rating S&P ancora oggi riportato nel prospetto di un'obbligazione di cui mi sono liberato con grande sollievo alcune settimane fa. O nuovamente c'è qualcosa che non ho afferrato o, dopo il caso Lehman, comincio a sospettare di essermi imbattuto in un caso di furbizia più che di negligenza.

 

[Imark]

Moody's ha fatto di peggio, ed ha portato CIT già due livelli sotto l'IG, a rating Ba2. Descritto più in dettaglio di quanto non avesse fatto S&P, il deterioramento degli asset di CIT Group appare già oggi molto significativo nel suo crescendo.

Il mantenimento dei livelli di capitalizzazione richiesti per la conservazione dello status bancario appare quantomeno incerto, salvo nuove iniezioni di cash da parte dell'unico soggetto che si può assumere disponibile a farle.

E' spiegata con maggiore chiarezza (almeno per me che di recente non avevo seguito) la portata della decisione della FED di autorizzare il traferimento a CIT bank dei loan asset di cui si era parlato in precedenza, ma il problema, anche per Moody's sembra restare quello per cui non basta avere status di banca commerciale per disporre di depositi.

Anche per Moody's, come per S&P, si enfatizza la situazione che viene a determinarsi di strutturale subordinazione dei creditori di Cit Group a quelli di CIT bank man mano che asset vengono trasferiti dal primo soggetto al secondo. Per Moody's tale situazione vale da sola un notch di downgrade (dei due di riduzione applicati).

E il futuro non promette granché di buono...

[FONT=verdana,arial,helvetica]Moody's downgrades CIT to Ba2[/FONT]

[FONT=verdana,arial,helvetica]New York, April 24, 2009 -- Moody's Investors Service downgraded the senior unsecured rating of CIT Group, Inc. to Ba2 from Baa2 and the firm's short-term rating to Not-Prime from Prime-2. Also downgraded were CIT's senior secured rating (to Ba1 from Baa1), its senior subordinated rating (to Ba3 from Baa3), its junior subordinated rating (to B2 from Ba1), and its preferred stock rating (to Caa1 from Ba1). The outlook on all ratings is negative. [/FONT]

[FONT=verdana,arial,helvetica]This concludes Moody's review of CIT's ratings initiated on January 22, 2009. [/FONT]

[FONT=verdana,arial,helvetica]Moody's said the rating downgrade reflects the continued rapid deterioration of CIT's asset quality trends, which contributed to a $430 million pre-tax loss for the first quarter. Moody's believes that pressures from further declines in asset quality and higher average borrowing spreads will likely result in CIT reporting additional operating losses through at least 2009. Moody's is concerned that the magnitude of net losses could jeopardize CIT's compliance with regulatory capital requirements. Another aspect of the downgrade, accounting for one-notch, is the anticipated structural subordination of CIT's holding company creditors associated with an expected transition of many of CIT's businesses into its bank subsidiary, CIT Bank. [/FONT]

[FONT=verdana,arial,helvetica]The decline in CIT's core commercial finance asset quality and operating results accelerated during the first quarter, surpassing Moody's expectations. Commercial net charge-offs reached 278 basis points for the quarter, versus 142 basis points in the prior quarter and 63 basis points in the year-ago quarter. Non-performing assets in CIT's corporate finance segment increased to $1.2 billion in the first quarter, or 5.86% of finance receivables, nearly triple the prior year level of $433 million, or 2.04%. Credit provisions of $535 million in the first quarter included additions to reserves of $222 million, but reserve coverage of non-performing assets remained little changed from year-end 2008 at 77.8%, indicating that further reserve building will be required if non-performing assets continue to climb. [/FONT]

[FONT=verdana,arial,helvetica]"Moody's currently estimates that the global default rate for speculative-grade corporates, which includes the middle market companies that CIT serves, will increase this year to nearly 15% from a first quarter level of about 7%," cool said Moody's senior credit officer Mark Wasden. "This suggests a degree of uncertainty regarding CIT's performance in the current environment," Wasden added. [/FONT]

[FONT=verdana,arial,helvetica]Moody's said asset quality performance is of particular concern in CIT's communications, media and entertainment business and other leveraged cash-flow loan portfolios, and in its commercial real estate business, reflecting not only higher defaults but also pressure on recoveries, due to weaker asset prices. [/FONT]

[FONT=verdana,arial,helvetica]Moody's also expects that higher average credit spreads will continue in the near-term to overwhelm marginal improvements in the pricing of new finance and lease assets. Net finance margin declined to 1.13% in the first quarter, versus 1.38% last quarter and 2.28% one year ago, whereas it has more typically ranged between 2.5% and 3.25% historically. [/FONT]
[FONT=verdana,arial,helvetica][/FONT]
[FONT=verdana,arial,helvetica]Borrowing costs could ease if CIT grows and sustains a base of low-cost deposits or if it obtains approval to issue guaranteed debt under the FDIC's Temporary Liquidity Guarantee Program (TLGP). Currently, CIT's deposits are comprised of brokered CD's covering a range of maturities, but the firm has no meaningful core deposit balances. The status of the firm's approval for participation in the TLGP is uncertain. [/FONT]

[FONT=verdana,arial,helvetica]Moody's believes that net losses CIT could report over the next several quarters could lead to a meaningful reduction in the firm's capital levels.[/FONT]
[FONT=verdana,arial,helvetica][/FONT]
[FONT=verdana,arial,helvetica]During 2008, CIT successfully generated about $5.8 billion of capital, including $1.3 billion of new common share issuance, $2.3 billion of TARP capital in the form of preferred interest and warrants, $.6 billion from issuance of convertible preferred stock, and $1.6 billion through the exchange of equity units and senior notes. [/FONT]
[FONT=verdana,arial,helvetica][/FONT]
[FONT=verdana,arial,helvetica]CIT was granted approval to convert to a bank holding company in December and now must maintain a 13% total capital ratio at the parent level and a 15% Tier 1 ratio at CIT Bank. At the end of the first quarter, CIT's preliminary total capital ratio measured just 13.0%. Moody's believes CIT's net losses are likely to be large enough to threaten its compliance with the total capital ratio requirement. To maintain compliance, CIT could find it necessary to reduce new business activity levels or raise new capital under uncertain conditions. CIT's assets reduced over $4 billion during the first quarter. [/FONT]

[FONT=verdana,arial,helvetica]In Moody's view, CIT's liquidity profile includes sufficient resources to meet the company's near-term obligations. The company ended the first quarter with $6 billion of restricted and unrestricted cash, and recently executed a $500 million securitization of equipment receivables. [/FONT]
[FONT=verdana,arial,helvetica][/FONT]
[FONT=verdana,arial,helvetica]The firm also received approval from the Federal Reserve to transfer $5.7 billion of student loans and $3.5 billion of related debt into CIT Bank, to take advantage of deposit funding raised by the bank. CIT is seeking regulatory approval to transition additional business platforms and assets into the Bank. If approved, these transfers would improve the diversification and cost of CIT's funding. However, Moody's considers the brokered CD's raised by the bank a form of wholesale funding, with less of the stability associated with core deposits. [/FONT]

[FONT=verdana,arial,helvetica]CIT's application to issue FDIC guaranteed debt under the TLGP could, if granted, provide the firm with additional resources to aid in its funding transition. CIT could also issue equipment finance securities that qualify under the Fed's Term Asset-Backed Lending Facility (TALF) as an addition funding source. [/FONT]
[FONT=verdana,arial,helvetica][/FONT]
[FONT=verdana,arial,helvetica]However, Moody's believes the combination of risks relating to CIT's continuing reliance on wholesale funding sources and its operating strategy transitions are a key constraint on the firm's ratings. [/FONT]

[FONT=verdana,arial,helvetica]Moody's also believes that as CIT's organizational and funding structure evolves under its new regulatory regime it will likely lead over time to increased structural subordination for holding company creditors relative to bank-level depositors and counterparties. This risk accounted for one notch of the downgrade to the company's ratings. [/FONT]

[FONT=verdana,arial,helvetica]CIT's ratings continue to reflect its strong presence in multiple commercial finance businesses, including leading positions in SBA lending, factoring, asset-based lending, equipment finance, railcar leasing and commercial aircraft leasing. The ratings also recognize the multiple achievements of company management during the past several quarters to build capital, generate new liquidity sources, streamline business lines and rationalize operating costs. [/FONT]

[FONT=verdana,arial,helvetica]The negative outlook assigned to CIT's ratings is based upon the continued operating challenges associated with the current credit cycle that are pressuring the firm's asset quality, earnings and potentially capital levels, as well as the uncertainty of the firm's liquidity profile. Though CIT has responded ably to its funding and operational challenges to date, Moody's believes the firm continues to face significant internal and external risks in the intermediate term. [/FONT]

[FONT=verdana,arial,helvetica]Moody's downgrade of CIT's junior subordinated debt to B2 from Ba1 increases the rating notches from the senior unsecured debt to three from two. The B2 rating incorporates Moody's expectation that it is less likely that the violation of the fixed-charge coverage trigger associated with the debt will be cured in the near term. CIT has used proceeds from the issuance of new common shares to settle the interest payments on the notes under the terms of the Alternative Coupon Settlement Mechanism (ACSM). [/FONT]
[FONT=verdana,arial,helvetica][/FONT]
[FONT=verdana,arial,helvetica]However, Moody's believes there is an increased risk that issuing common shares to settle interest owed on the notes may not be possible, which would result in interest payment deferral and accumulation. To the extent that interest deferral continues for an extended period of time, there is greater risk that accumulated interest will not be paid. [/FONT]

[FONT=verdana,arial,helvetica]Moody's downgrade of CIT's preferred stock to Caa1 from Ba1 increases the rating notches from the senior unsecured debt to five from two. The Caa1 rating reflects Moody's view that the dividends on CIT's A, B and C series preferred stock have a higher risk of payment omission and loss because dividends are non-cumulative. [/FONT]
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[FONT=verdana,arial,helvetica]Series A and B are in breach of a fixed charge coverage trigger and CIT has, to date, chosen to declare and settle dividends with proceeds from new common share issuance. However, if CIT either was not able or decided not to common share settle, the dividends would be entirely lost. In addition, Moody's believes that CIT's preferred stock is potentially at risk for an exchange to common equity should CIT need to bolster its capital position[/FONT]

 

[Imark]

Beh, ad occhio mi sembra sia quella.
L'unica cosa che mi sento di rilevare è il rating S&P ancora oggi riportato nel prospetto di un'obbligazione di cui mi sono liberato con grande sollievo alcune settimane fa. O nuovamente c'è qualcosa che non ho afferrato o, dopo il caso Lehman, comincio a sospettare di essermi imbattuto in un caso di furbizia più che di negligenza.

Sicuro che sia CIT Group e non Citigroup o qualche emittente di quel gruppo bancario ? Molti fanno confusione, ma sono due soggetti completamente differenti...

 

[lorixnt2]

Sicuro che sia CIT Group e non Citigroup o qualche emittente di quel gruppo bancario ? Molti fanno confusione, ma sono due soggetti completamente differenti...

Non ne sono assolutamente sicuro tanto è vero che te l'avevo chiesto anche prima . O ma non ci si capisce davvero un tubo in questa roba