MARKET STRUCTURE
The debt-buying market for credit card debt remains highly concentrated among a few buyers that purchase debt from many of the same issuers. Most of the surveyed issuers that sold debt reported selling to an average of 10 buyers year-over-year. However, there is a general trend of consolidation among surveyed issuers’ debt buyer networks: the Bureau’s 2017 Report found that in 2016, 20 unique debt buyers bought debt from the surveyed issuers that sold debt, while the current survey found that there were 17 unique buyers in 2020. Nine buyers purchased debt from two or more issuers, while six buyers bought debt from all the issuers that sold debt.
The underlined sentence conforms CCP is now in the Big Boys club – at least Number 4, perhaps Number 3 now. A sentence elsewhere in 6.3.3 reads, “The survey respondents that sold debt in 2020 indicated that they planned to sell between 38 percent and 50 percent of their freshly-charged-off debt in 2021 at an expected average price ranging from $0.10 to $0.12 per dollar of debt.” The FY2021 Encore Annual report stated, “. . . we maintained our focus on returns and deployed $665 million in 2021 to purchase portfolios at an average money multiple of 2.4x.”, which suggests 70% of the face value is never collected. CCP should be edging to a similar multiple as it matures in the USA market.
CCP Price at posting:
$24.04 Sentiment: Hold Disclosure: Held
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