Embattled commercial lender CIT Group (NYSE:CIT) reported Monday its tender offer for $1 billion in floating rate bonds, originally scheduled to be paid Monday, was successful.
With the Fed breathing down its neck, the New York-based lender, which became a Fed-supervised bank holding company in December, has been working hard to stave off bankruptcy after effectively getting shut out of lending markets and failing to convince federal regulators to guarantee its debt.
Today’s successful tender offer certainly gives the company little more breathing room on its debt. It is worth pointing out however, that the 59.8% of notes that were tendered was below the level the company announced last month (CIT amended the terms of the debt-buyback offer on July 24, lowering the minimum threshold required to 58% from 90%).
“The completion of this tender offer is another important milestone as the company continues to make progress on the development and execution of a comprehensive restructuring plan,” CIT said in a statement.
Under the terms of the deal, owners of 59.8% of the$1 billion issue will get $875 per $1,000 of principal notes tendered, while the holdouts will be paid in full.
According to CMA DataVision, the cost of protecting CIT bonds against a default is at 46.5 point. Meaning, it costs investors $4.65 million upfront plus a $500K annual fee to insure this debt.
CIT, one of the nation’s largest lenders to small and midsize businesses, is expected to file its quarterly earning report Monday.