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It has been many months since America spent the weekend on bank deathwatch. This time CIT, the lender to small and mid-market businesses, is fighting on. A group of bondholders has reportedly agreed to a $3bn secured loan at an eye-watering interest rate of 10 percentage points over Libor. That lifeline should enable the company to struggle through a $1bn bond maturity next month, buying it some time to negotiate other debt exchanges and pursue regulatory approval for the transfer of more assets into its bank subsidiary.

There is much to be pleased about here. In denying CIT permission to issue government-backed debt, the authorities gambled that the system could face down the failure of a financial institution with $75bn in assets. While not large (or interconnected) enough to trip the “systemic” switch, CIT could have been the fourth-largest bankruptcy (or fifth, counting the forced dismantling of Washington Mutual by regulators). Instead, the private sector conjured up a solution, even though some of CIT’s largest lenders refused rescue financing.

This, however, remains a stop-gap. CIT faces another $1.2bn in debt maturing from September to December, followed by $8.5bn next year. CreditSights, meanwhile, estimates the company may need to raise up to $7.6bn based on a stress test of CIT’s balance sheet.

More fundamentally, CIT must reinvent its wholesale funding model, while supporting its businesses’ waning earning power. After years at the top of small business lending tables, CIT has fallen to 16th place by volume, according to Foresight Analytics.

That CIT still has good assets helped it secure this deal – after all, half of its first-quarter commercial losses came in just three sectors within corporate finance, accounting for only 7 per cent of loans. But as emergency lenders pick off choice assets, less remains for those that must follow – including, potentially, the government. Off the critical list, CIT still requires intensive care.

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