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By clicking “I AGREE” [at the end of this document], 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 inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

 

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Announcement:

Moody's comments on ABS following CIT's emergence from bankruptcy

09 Dec 2009

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
No Related Data.
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