I have a large holding (overweight by my standards) in PGL.
I am less concerned by increased in BDD. An extra 200bps of BDD is already factored into the credit performance expectation of the company's modelling from what i can tell.
I am more concerned by their funding equation. How robust are their bank and wholesale investor lines of credit?
PGL should be providing the market with a confident market update statement (similar to Z1P). To say nothing just leaves the market concerned.
The inter-bank market locked up on Friday and credit spreads have blown out. PGL's business model is dependent on access to wholesale debt and cheaper cost of funds.
It is highly likely that originations will rapidly increase as there is a scramble for Tier 2 style lending from SMEs - this money need to be appropriately risk priced as 300bps will get written off given the recession cycle.
However at a Mkt Cap of ~$150m, the market has well and truly factored in a lot of downside....
PGL Price at posting:
94.5¢ Sentiment: None Disclosure: Held
