By  on July 13, 2009

CIT Group Inc.’s bonds and stock prices fell Friday amid concerns the financial powerhouse might be unable to raise capital through bond sales in the private sector without additional help from the U.S. government in form of debt guarantees.

The crown jewel among CIT’s assets is its factoring division, which is the main source of financing for many firms in the fashion industry.

Of concern is a bond maturing in August. Private sales of debt would enable CIT to pay off the August debt bill, as well as other debt coming due next year. Some industry sources said it was still too early to predict what might happen, or even whether CIT might have to consider a Chapter 11 filing.

A spokesman for CIT’s factoring arm could not be reached for comment.

Haresh Tharani, president of fashion firm Tharanco Group, which relies on CIT financing, said, “This is a different world where cracks are beginning to be filled in. The CIT issue is paramount. It is an important one for our industry and for Main Street U.S.A.

“The next 48 hours will be critical,” he said. “As a company, we are fine and we are not looking for alternatives to financing. I remain extremely positive that the government will assist CIT.”

Gary Wassner, president of Hilldun Factors, said, “CIT works with exactly the kind of companies and workers President Obama reached out to during his election campaign. The designer apparel and manufacturing industry in this country is vital, as vital as any core industry. CIT insures much of it against catastrophic failure. It would be hard for manufacturers and designers to ship their products to retailers today without the security of a factor’s guaranty, and CIT is the largest factor in the U.S.”

Wassner, who expects additional federal governmental support for the financial giant, added he would be “shocked” if the Obama administration allowed CIT to fail “if it truly understood how many small and medium business rely on CIT credit guarantees to protect themselves from retail failures.”

CIT is a participant in the federal Troubled Asset Relief Program, after receiving approval to change its charter to a bank holding company last year.

To continue reading this article...

To Read the Full Article
SUBSCRIBE NOW

Tap into our Global Network

Of Industry Leaders and Designers

load comments
blog comments powered by Disqus