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By clicking “I AGREE”, you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s information that becomes accessible to you (the “Information”). References herein to “Moody’s” include Moody’s Corporation. and each of its subsidiaries and affiliates..

 

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Announcement:

Moody's comments on ABS following CIT bankruptcy

02 Nov 2009

No further action on $7.03 billion of related Asset-Backed Securities.

New York, November 02, 2009 -- Yesterday, the CIT Group Inc. ("CIT") announced that it has filed a petition under Chapter 11 of the U.S. Bankruptcy Code. CIT, through its subsidiaries, acts as the servicer, master servicer, administrator, or servicing administrator in sixteen asset-backed securitizations. Importantly, the prepackaged reorganization plan did not include any of these or any other of CIT's operating subsidiaries. Moody's had previously on July 15 placed a number of CIT-sponsored Asset-Backed Securities (ABS) under review for possible downgrade, following the emergence of bankruptcy as a distinct near-term possibility. As such, a high likelihood of a CIT bankruptcy was already reflected in Moody's ABS ratings, and Moody's is not taking further rating action at this time. The assets backing the transactions are equipment leases, small business loans, student loans, and aircraft leases.

On July 15, nine CIT-sponsored securitizations were placed under review for possible downgrade in connection with the downgrade of the company's long-term rating to Ca. The review reflected the increased risk of a near term bankruptcy filing by CIT and the related servicer disruption risk.

In general, the bankruptcy of a servicer may disrupt its operations, with possibly detrimental effects on serviced ABS. For example, the servicer's employees may lack proper motivation or seek employment elsewhere, disrupting normal workflow. Collection activities may stall.

CIT's prepackaged bankruptcy seeks, among other things, to avoid a bankruptcy of the company's subsidiaries that perform servicing and administration functions for the securitizations. However, the ratings remain on review as the bankruptcy still presents some risks. For example, servicing quality deterioration is still possible, as the servicer may lose some of its workforce.

It is unlikely that the ratings will be confirmed before the company exits bankruptcy. Conversely, the ratings may face downward pressure if we have evidence that during the course of the bankruptcy process servicing quality is deteriorating (suggested, for example, by a spike in delinquencies).

A Moody's special comment published on October 1 describes in more detail the risks associated with servicing disruption in CIT transactions, presents a framework which we employed to evaluate the likelihood and extent of disruption, and summarizes our current view of related strengths and concerns in CIT-serviced ABS.

For more details, please see the report "Assessing the Impact of a Possible CIT Bankruptcy on CIT-Serviced ABS," which can be found on moodys.com at www.moodys.com/cust/getdocumentByNotesDocId.asp?criteria=PBS_SF177879 . In addition, Moody's publishes a weekly summary of structured finance credit, ratings and methodologies, available to all registered users of our website, at www.moodys.com/SFQuickCheck.

The ABS discussed in this press release are listed below.

U.S. Student Loan ABS:

Issuer: Education Funding Capital Trust -II (2003 Indenture)

Ser . 2003A-3, Currently rated Aaa on Review for Possible Downgrade, previously on March 17, 2009 Placed Under Review for Possible Downgrade

Ser . 2003A-4, Currently rated Aaa on Review for Possible Downgrade, previously on March 17, 2009 Placed Under Review for Possible Downgrade

Ser . 2003A-5, Currently rated Aaa on Review for Possible Downgrade, previously on March 17, 2009 Placed Under Review for Possible Downgrade

Ser . 2003A-6, Currently rated Aaa on Review for Possible Downgrade, previously on March 17, 2009 Placed Under Review for Possible Downgrade

Ser . 2003A-7, Currently rated Aaa on Review for Possible Downgrade, previously on March 17, 2009 Placed Under Review for Possible Downgrade

Ser . 2003A-8, Currently rated Aaa on Review for Possible Downgrade, previously on March 17, 2009 Placed Under Review for Possible Downgrade

Ser . 2003B, Currently rated A2 on Review for Possible Downgrade, previously on March 17, 2009 Placed Under Review for Possible Downgrade

Issuer: Education Funding Capital Trust-III (2003 Indenture)

2003-A-3, Currently rated Aaa on Review for Possible Downgrade, previously on March 17, 2009 Placed Under Review for Possible Downgrade

2003A-4, Currently rated Aaa on Review for Possible Downgrade, previously on March 17, 2009 Placed Under Review for Possible Downgrade

2003A-5, Currently rated Aaa on Review for Possible Downgrade, previously on March 17, 2009 Placed Under Review for Possible Downgrade

2003A-6, Currently rated Aaa on Review for Possible Downgrade, previously on March 17, 2009 Placed Under Review for Possible Downgrade

2003A-7, Currently rated Aaa on Review for Possible Downgrade, previously on March 17, 2009 Placed Under Review for Possible Downgrade

2003A-8, Currently rated Aaa on Review for Possible Downgrade, previously on March 17, 2009 Placed Under Review for Possible Downgrade

2003B-1, Currently rated A2 on Review for Possible Downgrade, previously on March 17, 2009 Placed Under Review for Possible Downgrade

Issuer: Education Funding Capital Trust - IV (2004 Indenture)

Class 2004A-2, Currently rated Aaa on Review for Possible Downgrade, previously on July 15, 2009 Placed Under Review for Possible Downgrade

Class 2004A-3, Currently rated Aaa on Review for Possible Downgrade, previously on July 15, 2009 Placed Under Review for Possible Downgrade

Class 2004A-4, Currently rated Aaa on Review for Possible Downgrade, previously on July 15, 2009 Placed Under Review for Possible Downgrade

Class 2004A-5, Currently rated Aaa on Review for Possible Downgrade, previously on July 15, 2009 Placed Under Review for Possible Downgrade

Class 2004A-6, Currently rated Aaa on Review for Possible Downgrade, previously on July 15, 2009 Placed Under Review for Possible Downgrade

Class 2004B-1, Currently rated A2 on Review for Possible Downgrade, previously on December 19, 2008 Placed Under Review for Possible Downgrade

Issuer: CIT Education Loan Trust 2005-1

Class A-1, Currently rated Aaa on Review for Possible Downgrade, previously on July 15, 2009 Placed Under Review for Possible Downgrade

Class A-2, Currently rated Aaa on Review for Possible Downgrade, previously on July 15, 2009 Placed Under Review for Possible Downgrade

Class A-3, Currently rated Aaa on Review for Possible Downgrade, previously on July 15, 2009 Placed Under Review for Possible Downgrade

Class A-4, Currently rated Aaa on Review for Possible Downgrade, previously on July 15, 2009 Placed Under Review for Possible Downgrade

Class B, Currently rated Aa1 on Review for Possible Downgrade, previously on July 15, 2009 Placed Under Review for Possible Downgrade

Issuer: CIT Education Loan Trust 2007-1

Class A, Currently rated Aaa on Review for Possible Downgrade, previously on July 15, 2009 Placed Under Review for Possible Downgrade

Class B, Currently rated Aa1 on Review for Possible Downgrade, previously on July 15, 2009 Placed Under Review for Possible Downgrade

Canadian Equipment Lease and Loan ABS:

Issuer: CIT Canada Equipment Receivables Trust 2008-1

Class A-2, Currently rated Aaa on Review for Possible Downgrade, previously on July 15, 2009 Placed Under Review for Possible Downgrade

Issuer: CIT Canada Equipment Receivables Trust II, Series 2009-1

Class A-1, Currently rated P-1 on Review for Possible Downgrade, previously on July 15, 2009 Placed Under Review for Possible Downgrade

Class A-2, Currently rated Aaa on Review for Possible Downgrade, previously on July 15, 2009 Placed Under Review for Possible Downgrade

U.S. Equipment Lease and Loan ABS:

Issuer: CIT Equipment Collateral 2006-VT2

Class A-4, Currently rated Aaa on Review for Possible Downgrade, previously on July 15, 2009 Placed Under Review for Possible Downgrade

Class B, Currently rated Aa3 on Review for Possible Downgrade, previously on July 15, 2009 Placed Under Review for Possible Downgrade

Class C, Currently rated A2 on Review for Possible Downgrade, previously on July 15, 2009 Placed Under Review for Possible Downgrade

Class D, Currently rated Baa3 on Review for Possible Downgrade, previously on July 15, 2009 Placed Under Review for Possible Downgrade

Issuer: CIT Equipment Collateral 2008-VT1

Class A-2A, Currently rated Aaa on Review for Possible Downgrade, previously on July 15, 2009 Placed Under Review for Possible Downgrade

Class A-2B, Currently rated Aaa on Review for Possible Downgrade, previously on July 15, 2009 Placed Under Review for Possible Downgrade

Class A-3, Currently rated Aaa on Review for Possible Downgrade, previously on July 15, 2009 Placed Under Review for Possible Downgrade

Issuer: CIT Equipment Collateral 2009-VT1

Class A-1, Currently rated P-1 on Review for Possible Downgrade, previously on July 15, 2009 Placed Under Review for Possible Downgrade

Class A-2, Currently rated Aaa on Review for Possible Downgrade, previously on July 15, 2009 Placed Under Review for Possible Downgrade

Class A-3, Currently rated Aaa on Review for Possible Downgrade, previously on July 15, 2009 Placed Under Review for Possible Downgrade

U.S. Small Business ABS:

Issuer: CIT SBL Company 2008-1

Class A, Currently rated Aaa on Review for Possible Downgrade, previously on July 15, 2009 Placed Under Review for Possible Downgrade

New York
Luisa De Gaetano
Vice President - Senior Analyst
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Gautam Garg
Associate Analyst
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's comments on ABS following CIT bankruptcy
No Related Data.
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MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY100,000 to approximately JPY550,000,000.

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