CIT Group's board of directors has approved $3 billion in emergency funds provided by the company's bondholders. The move grants CIT additional time to restructure, but analysts predict that bankruptcy is unavoidable as the company is simply shouldering more debt. The loan has a 2.5-year term and interest of 10 percentage points above the three-month LIBOR, resulting in a rate of about 10.5 percent. The rescue also will help CIT fulfill a $1 billion bond payment due next month. Some of the firm's larger bondholders include PIMCO and Pacific Investment Management.
According to the PitchBook Platform, CIT Group is the most active lender in private equity, having lent to 125 companies in the industry. The firm's lending activity surpasses that of other private equity lending bellwethers, such as GE Capital, PNC Financial Services, and Wells Fargo Foothill. Should CIT declare bankruptcy, private equity firms will experience more difficulty securing financing for acquisitions and middle-market deal flow, one of the enduring bright spots in the industry.