Ann: CLH Portfolio Enhancement Programme - 3rd Balbec Transaction, page-3

I am not so sure you are assessing the info around their return on this debt correctly.
Assuming you need to get a return of 40cents in the $. The 40c could be split.
i.e. cost to acquire debt 10c / cost to collect 10c / cost in interest/funding 10c (maybe too high these days) / profit 10c+

I sold 100's of millions of Telco debt over 25yrs and getting 10cents in the $ was a solid outcome depending on many factors.
This ranged from debt that had never received a payment (i.e. possible fraud e.g. 1.5 cents in the $) to debt that would over time pay in full but be too expensive to manage in house past a certain point.
I am also well aware of current sales of millions in other utilities that are no where near 12cents in the $.

Therefore obtaining 20cents on debt that is already under a payment arrangement and has proven payments at the point in the repayment cycle seems prudent.
How have you counted this prior repayment return (as per cents in the $$) before any Balbec transaction.

Therefore do not disagree that they "may" have to collect 40cents in the $ to be profitable but if they are selling debt that has already paid 20cents back and getting another 20 cents up front now to invest in better quality debt short term - I think they are being smart.
Surely no one believes they are just going to give away their margin - it has to be a win win for both sides relevant to cost of capital and who they can get funding from.
It is all about cost of money and buying new debt that has a higher return is certainly part of how CLH win long term as they build their debt purchased portfolio. The more debt the more they also come across the same individual/entity creating economies of scale etc etc.
A big negative surrounding CLH seems to be where they get their funding from and the issue of it drying up in a downturn.
Their approach with Balbec seems to be considered a negative - however I am just not sure why - is it supposedly giving away the crown jewels (i.e. payment arrangements) or just smart use of funding.
For now .....and I have plenty riding on it - I say smart use of a funding source - especially if both parties are happy with outcome as they infer in commentary and this is the 3rd transaction. Had plenty of time to say process does not work.