Rochester,NY 9/1/2009 11:19:47 PM
CIT Group, Inc. CIT, Says IOU to Bondholders
CIT Group, Inc.
CIT Group will postpone interest payments on bonds maturing in 2067, according to a regulatory filing the lender made Tuesday.
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 Quote) and Bank of America (BAC Quote), as well as for giant lender General Electric (GE Quote).
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.
CIT's shares, which have run up in recent days in concert with other highly distressed financial names like AIG (AIG Quote), Freddie Mac (FRE Quote) and Fannie Mae (FNM Quote), were more than 6% lower in premarket trading Tuesday.
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