CIT Disputes Moody's Downgrade Decision

CIT Group Inc., New York, said it disagreed with Moody's Investors Service's decision to cut the finance company's senior unsecured rating from "A3" down to "Baa1." Moody's said it made the cut because CIT has had deteriorating performance in its home lending business, leading to difficult operating and funding conditions. Furthermore, Moody's believes that uncertainty over the size of possible losses associated with CIT's mortgage portfolio is "a significant impediment to the firm reestablishing solid footing in the credit markets." A further downgrade is possible as "the mortgage portfolio could continue to limit the company's ability to re-establish its access to the unsecured funding markets, putting further negative pressure on the rating." In response, CIT issued a statement saying it disagreed with the action "in light of the significant progress we have made to strengthen our balance sheet, improve liquidity and position CIT for long-term success and profitability. We have successfully executed on our current strategic funding initiatives, which have included capital raising, asset sales, financings and growth at CIT Bank." These included raising $1.6 billion in new capital; completing financings of $1 billion; selling $2 billion of assets; and underwriting $600 million of loans at CIT Bank.