CIT Group looking to further bolster liquidity before returning to unsecured debt markets

By Jennifer Lanning Drey

Portland, Ore., July 17 - CIT Group Inc. continues to operate under an alternate funding plan that looks to be in a position to satisfy at least 12 months of estimated liquidity needs without accessing the unsecured debt markets, Joseph Leone, chief financial officer of CIT, said Thursday during the company's second-quarter earnings conference call.

The base liquidity plan also assumes no secured debt issuance beyond existing commitments and flat asset levels, with portfolio inflows used to finance new business, he said.

At the same time, Leone also said CIT is interested in returning to the unsecured debt market in the future, though he did not provide an estimated time when the company might be ready.

"While securing liquidity outside the capital markets is essential to weathering the storm, our primary objective is to return to the unsecured markets as soon as practical, repay our bank lines and stabilize our debt ratings," Leone said.

Liquidity initiatives

Since drawing on its bank lines in March, CIT has raised more than $10 billion without accessing the unsecured debt markets, the CFO said. Capital-raising initiatives included asset sales, such as the sale of CIT's home lending business.

During the second quarter, CIT also received $8 million of proceeds from secured financings, obtained a $3 billion long-term committed financing facility from Goldman Sachs, executed a secured aircraft financing facility and repaid $5.6 billion of unsecured term debt and commercial paper.

Additionally, CIT's industrial loan corporation, CIT Bank, originated $650 million of commercial loans.

"We are confident that we have more than 12 months of liquidity and our planned actions for 2008 will expand our runway into 2010," Leone said.

The company plans to continue to analyze potential asset sales, while CIT Bank intends to grow its deposits and use proceeds to continue to originate corporate finance loans, he said.

"We're feeling pretty good about liquidity, but we're going to continue to work on it," Leone said.

The company ended the quarter with $9.2 billion of cash, according to its earnings release.

CIT posted income from continuing operations of $48.1 million, down from income from continuing operations of $352.1 million in the second quarter of 2007.

CIT Group, a New York-based commercial finance company, said it will use the proceeds for general corporate purposes.

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