NEW YORK (CNN/Money) - A major debt rating agency slashed Tyco International's debt to "junk" status and cut the debt of its CIT financial services unit to a level just above "junk" Monday, making it the third agency to lower Tyco's debt within the past week.

Fitch Ratings cut Tyco's debt and commercial paper to "junk," saying the company's liquidity, near-term maturity schedule, changes in strategic direction, and the ongoing probe into the firm's financial relationships with executives remain concerns.

Fitch said the ratings watch on Tyco remains "negative."

The agency also cut CIT's debt and lowered its ratings watch to "negative" from "evolving." Fitch commented that the gap between Tyco and CIT assumes CIT will be spun off from Tyco in the near future and following that spinoff, CIT's debt is expected to be in the "A," or medium investment grade quality.

Fitch said a successful initial public offering of CIT will still leave Tyco reliant on external capital to meet its maturing debt obligations. Closing financing agreements will be increasingly difficult for Tyco as the series of debt downgrades makes borrowing money more expensive for the company.

In addition, Fitch said Tyco's balance sheet contains $28 billion of goodwill and any additional writedowns will pressure a bank covenant, including a 52 percent debt-to-capital ratio for the company.

The flurry of debt downgrades was fueled by the criminal indictment of Tyco's former chief executive, Dennis Kozlowski, on tax evasion charges. He pleaded not guilty and was released on a $3 million bond.

Rating agencies Moody's and Standard & Poor's cut Tyco's debt to just above "junk" status last week as well. S&P said it may cut the rating again if there are further developments in the criminal probe, an offering of its CIT financial services unit is not launched within the next two weeks, or if business conditions worsen.

Tyco also released one of its head lawyers Monday. Mark Belnick was let go by the company and then lashed out against his former employer in a prepared statement.

"Tyco is a company in distress and chaos as a consequence of the inappropriate conduct of its former chairman," Belnick said in a news release. The termination "will only further destabilize the company. "

Shares of Tyco (TYC: Research, Estimates) gained $1.31 Monday to close at $11.41.