I was not able to read the material written at disallowed link/investment-news/debt-ledgers-credit-corp-group/145441 dated 2 March 2018 well, because an advertisement that I could not remove blocked most of screen, allowing me to only read two lines at a time at the font size that I can see. The bit I mentioned earlier about CCP's GFC experience is transcribed below. The questions were raised by Alan Kohler, and answered by Thomas Beregi.
From this interview one, you may understand why Thomas Beregi has raised capital twice, since that interview to seize opportunity. He may in this Covid-19 situation not want to allow CCP's buying price to be so low again as to allow the likes of CCP to emerge again to disrupt the buy-side of the Australasian PDL market.
Tell us about about the pricing of debt ledgers, because I presume that in the GFC pricing collapsed, which allowed you to set yourself up with a very cheap book. Is that right, and what's been happening since then?
Yes, it was probably an overstatement to say it was very cheap. There was a lot going on during the GFC and there was a strong perception that was incorporated in our projection for the returns that we'd make out of those assets we were purchasing at the time. There was a strong overlay that unemployment would increase, and I guess that Australia was probably lucky, or I guess good management that unemployment didn't increase in the way we had thought. Now, with unemployment increases, that obviously reduces the sort of collection outcomes we can get on the debts we purchase.
So do you mean that the debt book was priced for a recession that didn't happen?
They were priced for an increase in unemployment, that's right. It did not happen, and and there was outperformance, and I guess other market participants are priced similarly, and at the same time competitors were constrained in their funding as a consequence of a sort of credit crunch aspect of the GFC, so that enabled us to purchase well.
CCP Price at posting:
$18.92 Sentiment: Hold Disclosure: Held
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