No action on approximately $7 billion of related Asset-Backed Securities.
New York, December 09, 2009 -- Yesterday, the CIT Group Inc. ("CIT") announced
that the U.S. Bankruptcy Court for the Southern District
of New York has confirmed CIT's prepackaged plan of reorganization.
CIT also indicated that it anticipates emerging from bankruptcy on December
10, 2009. CIT's emergence from bankruptcy has no immediate
impact on Moody's ratings of CIT-sponsored Asset-Backed
Securities (ABS).
On July 15, 2009 Moody's placed several ratings in these transactions
under review for possible downgrade as CIT's bankruptcy became more
likely. The review reflected our concern on the potential impact
of a CIT bankruptcy on its servicing operations. CIT's successful
debt restructuring is clearly a positive factor for the stability of the
servicing platforms going forward. However, Moody's
will maintain the ratings under review pending a review of CIT's
operations. We expect to complete the review and take final actions
in the first quarter of 2010.
CIT, through its subsidiaries, acts as the servicer,
master servicer, administrator, or servicing administrator
in sixteen asset-backed securitizations rated by Moody's.
Importantly, the prepackaged reorganization plan did not include
any of these entities or any other of CIT's operating subsidiaries.
Even when servicing entities are not in bankruptcy, however,
a parent company's financial distress may still impact servicing
quality. For example, the parent company may decide to reduce
staff at some of its subsidiaries, or postpone planned technology
investments. Also, the servicer's employees may lack proper
motivation or seek employment elsewhere, disrupting normal workflow.
To date, we have no evidence that CIT's process servicing
quality has deteriorated in a material fashion (as may be suggested,
for example, by a spike in delinquencies) during the course of the
bankruptcy.
Our further review of CIT's operations will include servicers for
student loans, small business loans, and equipment leases
in the US and in Canada. Our goal is to understand the details
of the company's plans and implementation progress, particularly
with regard to human resources and investment in the businesses going
forward.
A Moody's special comment published on October 1 describes in more
detail the risks associated with a possible servicing disruption in CIT
transactions, presents a framework which we employed to evaluate
the likelihood of disruption, and summarizes our 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. 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 - 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
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
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's emergence from bankruptcy