DBRS Downgrades CIT Group Inc. to A (Low), Trend Negative

DBRS has today downgraded all ratings of CIT Group Inc. (CIT or the Company) and its related subsidiaries, including its Issuer and Long-Term Debt rating to A (low) from “A.” Concurrently, CIT’s Commercial Paper rating has been lowered to R-2 (high) from R-1 (low). The trend on the long-term ratings is Negative. This removes CIT from Under Review with Negative Implications, where it was placed on March 20, 2008.

This rating action considers DBRS’s opinion that the prolonged disruptions in the global unsecured credit markets, along with the ongoing difficult market conditions, have reduced CIT’s financial flexibility as funding for market-funded companies has become increasingly difficult. Moreover, the rating action reflects DBRS’s view that the current difficult environment and the accelerating weakness in the U.S. economy will likely result in reduced new loan originations and increased credit costs as CIT’s core customers, middle-market companies, will likely be pressured from a substantial reduction in both business and consumer spending.

DBRS recognizes that CIT’s management continues to successfully execute on its contingent funding plan and that the Company has taken significant steps to stabilize its liquidity profile; however, traditional sources of funding remain unavailable to the Company. While CIT continues to successively obtain various secured funding vehicles, this current funding activity has come at the expense of encumbering the balance sheet and increasing funding costs.

The ratings are based on the Company’s overall strong business franchise as one of the largest independent commercial finance companies, the diverse earnings profile of the core business segments, the Company’s sufficient capitalization, as well as its sound asset management and credit culture. DBRS views CIT’s overall balance sheet risk profile as improved with the disposal of the Home Lending business. However, the Company’s core commercial portfolio has experienced some deterioration in credit performance given the ongoing global capital market turmoil and a slowing economy, which have negatively impacted CIT’s customers. Accordingly, DBRS expects that credit costs will remain elevated, albeit from historical low levels, for the remainder of this year and through 2009.

The Negative rating trend on the long-term debt reflects DBRS’s view that the current difficult environment may add increasing pressure to CIT’s balance sheet and earnings profile. While CIT’s management has taken the appropriate actions to secure funding and protect the franchise, in the longer term ratings may be pressured by the increasingly encumbered balance sheet, especially should this encumbrance increase markedly. Furthermore, DBRS believes the current difficult operating environment will delay CIT’s core commercial segments’ ability to return to their historical ability to achieve consistent revenue and earnings growth. DBRS remains concerned that the reduced level of profitability due to pressured margins, lower loan volume and increased credit costs will weaken CIT’s ability to protect its strong franchise, which underpins the rating.