CIT Group Inc., the lender led by John A. Thain, took its second step in two weeks toward reducing high-cost debt by saying it will redeem notes that carry interest rates of more than 10%.
About $860 million of Series B second-lien notes will be redeemed at 103.5% of the principal amount, CIT said Tuesday. The 10.25% notes mature in 2015 and 2016. The move, to be completed Nov. 4, will leave outstanding $750 million of the series maturing in 2017. In September CIT said it was redeeming $537 million of the series of notes maturing in 2013 and 2014.
CIT is shrinking its balance sheet while developing less expensive sources of funds to help the company recover from bankruptcy. Before emerging from court protection in December, it had relied on the short-term capital markets, which dried up for CIT after losses from bad loans, including subprime mortgages.
The company's debt was reduced by more than 20%, to $43.3 billion in the bankruptcy. It has since repaid or refinanced $7.5 billion of first-lien debt. The latest Series B redemption brings the two-week total to $1.4 billion.