NEW YORK, July 14 (Reuters) - Standard & Poor’s said on Tuesday that 1,881 synthetic collateralized debt obligations are exposed to CIT Group (CIT.N), the troubled small business lender struggling with a liquidity crisis.
Synthetic CDOs are structured products backed by a portfolio of credit default swaps.
Europe has the largest exposure to CIT, with 977 synthetic CDO transactions, followed by the United States, with 701, Japan with 104, and the Asia-Pacific region excluding Japan with 99.
S&P on Monday downgraded its counterparty rating on CIT to CCC-plus, one of the lowest rating categories above default, saying near-term liquidity concerns have mounted because of CIT’s failure to secure government-guaranteed funding.
U.S. regulators were exploring aid options for CIT, a key source of financing for small and medium-sized companies. If CIT is unable to access government-guaranteed funding or other liquidity sources, it might attempt to restructure its debt, perhaps in bankruptcy or through a debt exchange, S&P said on Monday.
The net amount of credit default swaps based on CIT’s individual debt is about $3.46 billion, according to data from the Depository Trust and Clearing Corp. CIT has also been a member of every series of the U.S. benchmark investment grade CDS index since the first was launched in 2004. Net volumes of around $360 billion are outstanding on the total of these twelve series, DTCC said. (Reporting by Dena Aubin; additional reporting by Karen Brettell; Editing by Dan Grebler)