Fitch downgrades CIT Group’s issuer default rating after lender completes debt purchase

Fitch downgrades CIT’s issuer default rating

NEW YORK — Fitch Ratings downgraded CIT Group Inc.’s issuer default rating Monday after the commercial lender said it managed to stave off a likely bankruptcy filing by repurchasing some of its outstanding debt at a discount.

The rating agency said it lowered the IDR to “restricted default” from “C,” following the Monday announcement.

Earlier in the day, the embattled New York-based lender offered to buy $1 billion in debt that was set to mature Monday. CIT warned that if not enough bondholders were willing to sell the debt back to the company, it would likely have to file for bankruptcy protection.

Nearly 60 percent of the debt was tendered for purchase, barely topping the 58 percent minimum needed to complete the offer. CIT is paying $875 for every $1,000 tendered as part of the offer.

Despite Monday’s deal, Fitch said CIT continues to have “acute” liquidity issues, and that the lender may yet seek bankruptcy protection and said more coercive debt exchanges could take place in the future.

More debt is due to mature next year.

CIT serves as short-term financier to about 2,000 vendors that supply merchandise to 300,000 stores, according to the National Retail Federation. Analysts say 60 percent of the apparel industry depends on the company for financing.