Commercial finance company CIT Group has agreed to a $3 billion long-term financing commitment from Goldman Sachs, a deal that was announced yesterday.
The 20-year securities-based financing facility, which has a 15-year average life, will give CIT the funding flexibility to finance both existing assets and new originations.
CIT will pay Goldman a 2.85% annual fee on the facility, according to a filing with the Securities and Exchange Commission. Amounts financed under the facility will have the additional cost of 3-month Libor.
The deal will further strengthen CITs balance sheet and improve and diversify its liquidity and funding, said the company. It pointed out that since the beginning of April, it has raised $1.6 billion in new capital, retired approximately $5 billion in debt, and sold off assets.
CIT, which was downgraded by Moodys Investors Service at the end of May to Baa1 from A3, has faced liquidity issues thanks to troubles in the student loan and securitization sectors.