CIT traded at 23.5 points upfront, an extreme level of distress, according to broker Phoenix Partners

Investors are concerned CIT will have to refinance debt due in coming months, in markets which have either frozen completely or where, at best, the refinancing will cost the financial services company a lot more.
Risk premiums on CIT credit default swaps - privately negotiated contracts that many investors use as a proxy for the creditworthiness of a company - traded at 23.5 points upfront, an extreme level of distress, according to broker Phoenix Partners. This means that an investor would have to pay $2.35 million upfront plus $500,000 a year to protect $10 million of CIT bonds against a default.
Such protection was trading at 16-18 point upfront Wednesday afternoon, an already elevated level, before eventually closing at 23 points upfront, Phoenix Partners levels show. Shares of the company were recently down 25% to $8.72.
Like many of its peers, CIT has found itself caught in a storm of liquidity concerns and investors have lost confidence in the company. today’s developments, CIT Group drew down every last dime in available credit ($7.3B) today as it struggles to remain solvent. Shares of the financial mammoth plunged 44%, as the company drew down the bank line as it contends with a floundering $90B portfolio. The company has some $15 billion of debt to pay back in 2008, and nobody is willing to step up to the table and provide re-financing; especially since $9.2 billion of the overall portfolio is subprime mortgages and $11.5 billion is student loans – items that currently make most investors run for the nearest exit.
Both Moody's Investors Service and Standard & Poor's cut CIT’s long and short term debt ratings this week. The cost to insure CIT debt with credit default swaps is also trading at distressed levels, showing that most institutions expect the financial firm to not be able to meet its obligations.
Every day brings new stories of calamity at major financial institutions; it appears that the credit crisis is far from over for the banking industry.