Yes most of the PDP ledger buyers are highly leveraged. If you...

Yes most of the PDP ledger buyers are highly leveraged. If you look at them as a business similar to buying and selling goods then you could say they buy money at one price and sell it for another to customers who already have a duty to buy it at a heavy margin to the cost price. Problem is there is quite a bit of wastage in that the customer is usually cash strapped and not all will be able or want to pay. So the three really important things to watch are PDPs should be from reputable operators and have relatively short terms to completion, prices give margins wide enough to absorb the anticipated losses and the funding terms are reasonably matched to the timing of the PDPs and at a rate which will give the margin required. Most problems encountered by these types of companies are due to breaching funding covenants when terms are not well matched to their PDP timing and the required margin to meet collection costs and losses. More recently some (not PNC) are saying their profits have been withered due to the lack of quality PDPs to buy ie they are having trouble obtaining the inventory or stock-in- trade.