Important Disclosures regarding Price Target Risks, Valuation Methodology, Regulation Analyst Certification,
Investment Banking, Ratings Definitions, and potential conflicts of interest begin on Page I of the Appendix Section.
800 Shades Creek Parkway
Suite 700
Birmingham, AL 35209
205-949-3500
Sterne, Agee & Leach Inc. is Member NYSE, FINRA, SIPC
Fiscal Year Ends Dec
Rating:
Buy
Price: Close
$37.03
Price Target:
$40.00
52-wk Range:
$24.83-$37.75
Market Capitalization (M):
$7,406.0
Shares Outstanding (M):
200.0
Avg. Daily Vol. (000):
3,258
Book Value/Share:
$40.59
Price/Book Value:
91%
Equity/Assets:
13.2%
Assets (B):
$61.8
Henry J. Coffey, Jr.,
CFA
(615) 760-1472
hcoffey@sterneagee.com
March 12, 2010 | 6 Pages
CIT GROUP, INC. (NYSE: CIT)
Specialty Finance
RATING: BUY
Flash Note
BKHEADLINE
Bullet point. Bullet summary point
Bullet point. Bullet summary point
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CIT COMPLETES EQUIPMENT SECURITIZATION
$667 million securitization
CIT priced a rated securitization backed by equipment loans.
The advance rate on the AAA-rated bonds is estimated to be 70%
to 80%, and the blended cost of funds on the AAA notes was
estimated to be 1.884%. The net advance rate on the total facility
was 89.5% and the blended cost of funds was 3.31%. The
company indicated only $50 million (7%) of the notes sold were
sold to investors using financing under the TALF program.
Better than expected
In our modeling we have been assuming a cost of funds on
secured borrowing of 3.00% and an advance rate of 80%. The
advance rate on the AAA appears to be close to this and the cost
of funds significantly lower. The advance rate on the total deal
was much better than our modeling and the cost of funds only
modestly higher.
Use of Proceeds
We do not know how much of the $667 million was used to
refinance existing conduits and how much is available for paying
off higher yielding debt. In theory, with