Tighter credit markets squeezing CIT
CIT relies on a number of market-based funding programs to raise money for its loan and lease programs. They include (per its last 10-K): "commercial paper, unsecured debt, and both on-balance sheet and off-balance sheet securitizations" plus "conduit facilities and committed bank lines of credit."
The trouble is that CIT's ratings have recently been cut by Moody's and S&P. That has market players worried the company could lose access to short-term funding. The result: CIT is drawing on its $7.3 billion in backup, unsecured bank credit lines. If you recall, we saw Countrywide Financial do something similar last August when it experienced funding pressures in the market.
The moral of the story? Every time you think you have the credit market turmoil and problems licked, another "mole" pops up.