recent guidance shows they have written down some 33 mil in the loan portfolio, but the market is not buying it and it is clear that writedowns are going to be a lot higher than that.
of course they are only showing some 6 cents in losses but with 500 mil in loans a write down of 100 - 150 mil would be a fair expectation which is 20 - 30 cents and hence the market price we have today.
so it is based on faith that writedowns will not translate into defaults, but that is why the market is nervous.
the value of the real estate and currency hedging is not the main issue, but adds to the risk.
If there is a credit default all dist payments would cease in the case of no tangible profit, hence the yield calculation is currently irrelevant.
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