CIT to Sell $4.2 Billion in Mortgage Bonds to Freddie Mac
In a second mortgage sell off, CIT Group has announced plans to sell off a huge amount of it’s mortgage debt on the secondary market.
Reuters reports:
The deal is expected to close later this month. CIT Group has borrowed $2 billion from Morgan Stanley against its expected proceeds from the sale.
The move was seen as a positive by investors concerned about CIT Group’s access to short-term credit markets. The company’s shares rose as much as 9 percent before giving back most of their gains. The cost of protecting CIT Group’s debt against default dropped dramatically.
New York-based CIT Group is still borrowing in commercial paper markets, but financing with short-term debt has become more expensive for many companies in recent months, with some issuers finding themselves shut out entirely.
Good news perhaps for CIT, bad news for the American government that will be buying up those loans.
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