CIT Group Inc
. (
CIT
) announced the pricing of a registered public offering worth
nearly $3 billion. This marks the fourth bond offering by the
company in the current year.
The public offering includes $1.75 billion of senior unsecured
notes due in 2017 and $1.25 billion of senior unsecured notes
maturing in 2022. The former senior notes are priced at par and
carry a coupon rate of 4.25%. Moreover, the latter senior notes are
priced at par but these bear an interest rate of 5.00%.
CIT anticipates the offering to be completed by August 3, 2012,
subject to certain customary conditions. Merrill Lynch, a wing of
Bank of America Corporation
(
BAC
), Deutsche Bank Securities Inc., a unit of
Deutsche Bank AG
(
DB
),
The Goldman Sachs Group, Inc
. (
GS
) and
JPMorgan Chase & Co.
(
JPM
) are acting as the joint book-running managers for the offering.
The sale proceeds from the offering are planned to be used for
general corporate purposes. Additionally, refinancing of $3.8
billion of 7% Series C Notes is also expected out of the proceeds.
Of this amount, nearly $2.4 billion worth of notes will be maturing
in 2016 and approximately $1.4 billion of 7% notes will mature in
2017.
Earlier in May, CIT had offered $2 billion worth of senior notes.
Of the total, $1.25 billion worth of senior notes are due in 2017
and the remaining lot, worth $750 million, is due in 2020.
CIT has been constantly restructuring its balance sheet to bring
down its cost of capital and improve profitability. On July 20, CIT
announced that it would redeem $600 million of its 7% Series C
Notes maturing in 2017 on August 20. Following the completion of
this redemption, the company will have eliminated or refinanced
over $26.5 billion of high-cost debt since 2010.
The several bond offerings by CIT emulate the funding profile
conversion and increased investor confidence in the stock. We
anticipate all these to favor the company's future growth as well.
However, a slow economic recovery, stringent regulatory landscape
and persistent low interest rate environment remain the major
causes of concern.
CIT currently retains a Zacks #3 Rank, which translates into a
short-term Hold rating. Considering the fundamentals, we also
maintain a long-term Neutral recommendation on the stock.
BANK OF AMER CP (BAC): Free Stock Analysis
Report
CIT GROUP (CIT): Free Stock Analysis Report
DEUTSCHE BK AG (DB): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis
Report
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