Aggiornamento sul punto: nei suoi colloqui con esponenti del governo, CIT enfatizza il proprio preteso rilievo sistemico derivante dalla circostanza per cui essa svolgerebbe il ruolo di solo finanziatore di centinaia di migliaia di piccole e medie imprese.
Geithner da un lato cerca di rassicurare, dall'altro non ha detto ancora nulla di ultimativo circa l'intenzione di salvare oppure meno CIT evitandone il default...
Non mi stancherò di dire che tuttavia il problema resta quello di indicare un criterio univoco di intervento pubblico per le holding bancarie, in caso di futura necessità...
E CIT, comunque la si metta, rappresenta un precedente che vincolerà questa amministrazione, anche a voler pensare che su GMAC le decisioni in merito fossero retaggio delle scelte dell'amministrazione precedente...
Nel mentre i bond TV in $ a scadenza in agosto cadono a 80/100
CIT in ‘Active’ Talks for State Aid as Bonds Tumble (Update1)
By Pierre Paulden and Caroline Salas
July 14 (Bloomberg) --
CIT Group Inc., the century-old lender that’s been unable to persuade the government to back its debt sales, is in “active discussions” with regulators about a rescue before $1 billion of bonds mature next month
The company said in a July 12 statement that it was in talks with regulators on a “series of measures to improve the company’s near-term liquidity position.” Those discussions continued yesterday,
Curt Ritter, a spokesman for the New York- based company, said. CIT rose 27 percent in Frankfurt trading
Bond investors stepped up bets that CIT won’t be able to come up with enough cash in time to honor its debts. CIT’s $1 billion of floating-rate notes maturing in August plummeted 14.375 cents to 80 cents on the dollar yesterday, their worst performance since the notes were issued three years ago, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority
“They’re on life support right now,” said
David Hendler, an analyst at debt research firm CreditSights Inc. in New York. The financial system is in a “once in a lifetime meltdown” and CIT “went into it in a weakened position,” he said
The Federal Deposit Insurance Corp. is concerned that standing behind CIT’s debt would put taxpayer money at risk because the company’s credit quality is worsening, people familiar with the regulator’s thinking said last week. One of those people said yesterday the FDIC’s view hasn’t changed.
Funds Transfer
While Federal Reserve policy makers aren’t inclined to provide CIT with emergency financing, they are considering the company’s request to allow it to transfer funds from the parent firm into its banking unit, according to an official familiar with the matter. Fed spokeswoman
Michelle Smith and FDIC spokesman
Andrew Gray declined to comment
Treasury Secretary
Timothy Geithner said yesterday that the government has “the authority and the ability” to address CIT.
“We have a significant interest generally in trying to make sure the financial system gets through this, adjusts where it needs to adjust and emerges stronger,” he said at a press conference in London.
The Treasury, which has been reluctant to extend further money from the $700 billion Troubled Asset Relief Program, had asked the central bank and FDIC to assess options for helping CIT, the official also said. Meg Reilly, a Treasury spokeswoman in Washington, said the agency declined to comment.
“CIT represents a difficult policy issue for Washington as there is sentiment to punish the fat cats and greed matched by what potential damage could be done against an economy struggling to regain momentum with all of its possible political fallout,” said
Scott MacDonald, head of research at Stamford, Connecticut-based Aladdin Capital Management LLC.
Emergency Financing
Moody’s Investors Service slashed CIT’s credit
rating four levels to B3 from Ba2 yesterday and said the ranking may be cut further because of the company’s “inadequate progress” toward improving its liquidity, according to a statement. Standard & Poor’s also lowered CIT’s rating four levels, to CCC+ from BB-, citing requests by CIT borrowers to draw down on credit lines provided by the company.
A collapse of the company, run by Chairman and Chief Executive Officer
Jeffrey Peek, would put 760 manufacturing clients at risk of failure and “precipitate a crisis” for as many as 300,000
retailers, CIT said in internal documents obtained by Bloomberg News.
It would also be the biggest bank failure since regulators seized
Washington Mutual Inc. in September. CIT reported $75.7 billion in assets and $68.2 billion in liabilities, including $3 billion in deposits, at the end of the first quarter.
CIT rose 36 cents, or
27 percent, to $1.71 as of 10:24 a.m. in Frankfurt trading, according to data compiled by Bloomberg.
Small Business
CIT funds about 1 million businesses from
Dunkin’ Brands Inc. in Canton, Massachusetts, to Eddie Bauer Holdings Inc., the bankrupt clothing chain in Bellevue, Washington. The company says it’s the third-largest U.S. railcar-leasing firm and the world’s third-biggest aircraft financier.
“Next year is mid-term elections and a CIT failure would complicate matters as it is likely to hurt small- and medium- sized businesses which does not help Democratic claims of helping the small people,” Aladdin’s MacDonald said.
CIT has $10 billion of debt maturing through 2010 and hasn’t sold
bonds in more than a year, according to data compiled by Bloomberg. The firm became a bank in December to qualify for a government bailout and received $2.33 billion in funds from the U.S. Treasury
FDIC Talks
The FDIC, run by Chairman
Sheila Bair, is in discussions with CIT about how the lender can strengthen its financial position to get approval, including raising capital, said the person familiar with the talks, who declined to be identified because the application process is private. The company’s efforts to transfer assets to its bank have been insufficient to improve its credit quality, the person said.
The FDIC has backed $274 billion in bond sales since Nov. 25 under its Temporary Liquidity Guarantee Program, designed to give creditworthy borrowers access to funds after debt markets seized up following the failure of Lehman Brothers Holdings Inc. in September.
CIT’s July 12 statement said the talks include CIT’s application for FDIC funds and measures such as the transfer of assets to CIT Bank.
Hiring Advisers
CIT, which reported more than $3 billion of
losses in the past eight quarters, said it hired law firm Skadden, Arps, Slate, Meagher & Flom LLP as an adviser.
Jay Goffman, co-head of New York-based Skadden’s global corporate restructuring group, declined to comment on the firm’s work for CIT.
CIT’s internal report outlines the potential effects of a failure on customers to which it’s committed $3.9 billion of bank lines. A collapse would ripple across the “small- and medium-sized businesses who rely on CIT to operate -- to pay their vendors, ship goods to their customers and make their payroll,” according to the documents.
A “substantial portion” of clients “would not have easy access to additional revolving credit without CIT,” the company said in the presentation. “This could lead to business failure for those who lack additional liquidity.”
“For all of those companies dependent on CIT for credit there are no alternatives,” said Aladdin’s MacDonald. “At least where the economy stands now.”