CIT assets attractive but only to bargain hunters

By Paritosh Bansal and Jui Chakravorty Das

NEW YORK (Reuters) - Many of CIT Group Inc's businesses, including trade and transportation finance, could be of interest to potential buyers as the commercial lender stares at the possibility of bankruptcy.

But this is a bad market in general for CIT to be selling any assets as the economic downturn has hurt many of its markets badly, driving down values.

Disposals under distress would not only draw firesale prices but could also lead to legal challenges down the road, investment bankers said.

The chances of a bankruptcy were heightened on Wednesday when CIT, a major lender to small- and mid-sized U.S. businesses, said the government had told the company that it was not going to provide additional support and that bailout discussions had ceased.

In a report which cited a source close to the company, CNBC said CIT was likely to file for Chapter 11 protection from creditors on Friday.

CIT's trade finance business is one of its most valuable units, a source close to the lender said.

"It's also the unit that the government has the most interest in preserving for the health of the small business economy," the person said.

The source listed JPMorgan Chase & Co as the most logical suitor for the unit. JPMorgan has the balance sheet to finance the unit and a lot of experience in asset-backed lending, the source said.