S&P lowers CIT

Standard & Poor's said it lowered its ratings, including its counterparty credit rating, on CIT Group Inc. to BBB-/A-3 from BBB/A-3.

The outlook is negative.

The agency said the rating action reflects weaker-than-expected first-quarter and prospective earnings due to increasing provisions needed to cover weakening asset quality, particularly in CIT's corporate finance segment, and also reflects the risks inherent in CIT's transition from a primarily wholesale-funded finance company to a commercial bank, especially considering the continued difficult credit market and volatile economic conditions.

The rating also incorporates S&P's view that CIT's funding flexibility continues to be somewhat challenged given that its application for the FDIC's Temporary Liquidity Guarantee Program is still pending.

This concern is partially offset by the Federal Reserve's approval of the initial phase of CIT's 23A waiver, which enabled the movement of government-guaranteed student loan assets to CIT Bank Ltd., the agency said.

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