PrefBlog

I’ve been wondering when there would be some more news on CIT! Here’s a rumour:

Citigroup Inc. and Barclays Capital are offering to provide financing to CIT Group Inc., the commercial lender that’s struggling to avert bankruptcy, according to people familiar with the situation.

The 101-year-old company’s bondholders are also seeking to provide about $2 billion in loans as a restructuring deadline approaches tomorrow, said the people, who declined to be identified because the negotiations are private. New York-based CIT may choose other options, the people said.

CIT said in July it may seek court protection from creditors after Chief Executive Officer Jeffrey Peek failed to win a second government bailout and had to turn to bondholders for $3 billion in rescue financing. The company said in an Aug. 17 regulatory filing that it has to come up with a plan “acceptable” to the majority of a bondholder steering committee that provided it with the emergency cash by Oct. 1.

More rumours:

CIT Group Inc., the 101-year-old commercial lender, is planning to start a debt exchange offer that will include a so-called pre-packaged bankruptcy option, a person familiar with the matter said.

The company plans to start a voluntary swap “within days,” said the person, who declined to be identified because talks are private. At the same time, New York-based CIT proposes that debt holders vote on a pre-packaged bankruptcy plan in case the exchange fails, the person said.

The preferred share market closed the month on a sour note, with PerpetualDiscounts down 13bp and FixedResets losing 7bp. Index figures are still unofficial, but I make PerpetualDiscounts down 1.20% total return for the month and FixedResets up 0.21%. Volume was good on the day, led by the TRP new issue and dominated by other FixedResets.

PerpetualDiscounts closed yielding 5.80%, equivalent to 8.12% interest at the standard equivalency factor of 1.4x. Long Corporates now yield a smidgen under 6.0%, so the pre-tax interest-equivalent spread is now about 215 bp, a widening of 10bp from the 205bp reported September 23 and at the high end of “Credit Crunch Normal”.

Congratulations to Assiduous Reader beluga, who won yesterday‘s over/under contest on the TRP new issue volume!

This entry was posted on Wednesday, September 30th, 2009 at 9:29 pm and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.