CIT Strikes $3B Deal, Averting Bankruptcy

CIT Group Inc. has made a deal for a $3 billion rescue package from bondholders to stay afloat, Reuters reports. The board of the lender, which was facing bankruptcy, struck a tentative agreement tonight. It includes high interest rates and apparently lacks long-term solutions, reports the Wall Street Journal. But the stopgap measure buys CIT time to stabilize by transferring assets to its bank in Utah—if the federal government agrees—and make debt-exchange offers to bondholders.

One analyst is not impressed: "Even if they put together a deal today and postpone a bankruptcy filing, CIT may be back in the same place in the not-too-distant future because unemployment rates, business-loan delinquencies and corporate default rates are climbing," he told the Journal. "The outlook for the next six months looks pretty rough for many banks, including CIT." (More CIT Group stories.)