An impending bankruptcy or other "credit event" of besieged lender CIT Group could hurt the flow of goods between manufacturers and retailers, but according to Fitch Ratings, would have a minimal impact on investment-grade ratings of synthetic collateralized debt obligations (CDOs). Fitch announced it downgraded CIT to single-C Thursday, after the lender learned late Wednesday it would not receive a second bailout from the federal bailout. Fitch downgraded CIT to single-C earlier today, and the 1m small and medium businesses that rely on CIT for short-term loans face the possibility of not having their lines of credit available to them to make payroll. Fitch’s report would seem to substantiate the belief that CIT was not “too big to fail,” and the lender’s bankruptcy would not trigger the sort of cataclysmic financial meltdown regulators feared would happen if the large banks were allowed to fail during the onset of the credit crisis. Fitch conducted sensitivity analysis of its rated synthetic CDOs and found while CIT is referenced in 53% of its rated synthetic CDOs, investment-grade tranches will be able to absorb a potential loss without being downgraded. However, Fitch believes some B-rated tranches could be vulnerable to downgrades resulting from diminished credit enhancement from potential CIT losses. Write to Austin Kilgore.