In that video that Chewy5 mentioned, Thomas Beregi said that PDL prices were declining in the USA, and that may justify CCP purchasing more PDLs there. Whether the price of PDLs can drop by the 15% that CCP would like, remains to be seen. Below is what Encore Capital stated in relation to the USA in its report for the quarter ended 30 June 2016:
“Prices for portfolios offered for sale directly from credit issuers are beginning to decrease after several years of elevated pricing, especially for fresh portfolios. Fresh portfolios are portfolios that are generally transacted within six months of the consumer’s account being charged-off by the financial institution. Industry delinquency and charge off rates have been at historic lows, and they are beginning to increase which creates higher volumes of charged-off accounts. We believe the softening in pricing, especially fresh, is primarily due to this anticipated growth in supply.”
The bad-news-is-good-news slant (higher delinquency causes lower PDL prices) underscores that this style of business can accommodate economic slumps. The advantage of cheaper PDLs, and more of them, would to a degree be partially offset by a more difficult collections milieu.
CCP Price at posting:
$16.49 Sentiment: Hold Disclosure: Held
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