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