Unable to come to a solution with anyone else, CIT has surprised us all yet again, by securing a $3 billion loan from a group of its bondholders. The terms of the loan are 2.5 years at L+1000bps (yup, 10% over LIBOR – sweet). The hope here is that this loan will provide CIT with enough time to adequately restructure and resize their current obligations – otherwise, it is back to the steps of bankruptcy court for them.

CIT is Saved (Probably…Maybe…Hopefully)

While many of the largest banks that have received help cater to all company sizes, CIT predominantly lends to small and midsize companies. Therefore, while a CIT collapse may not be catastrophic to the economy, but can severely impact many small and midsize companies across the country.

Having already received $2.3 billion under TARP with little to show for it, combined with the government’s unwillingness to include CIT in the additional assistance opportunities/programs, is a run on the bank inevitable? On the other hand, perhaps plans will come to fruition and the government will decide to provide further assistance to the troubled player. Time will tell, but with nearly $3 billion in debt maturing in the next several months, the amount of said time may not be very much at all.

CIT No More?