"Where things start to get very opaque is the Asset Backed...

"Where things start to get very opaque is the Asset Backed Securitization process where ECX has issued several tranches ($450m last tranche alone) of bonds against its leasing and financing operations. Anyone more familiar with this kind of financing able to give an idea of the risk to the business this creates?"

Nothing if the underlying asset values hold up. Usually in a securitisation program there will be buffer i.e ECX will secure 100% of an asset class however only receive 80% value up front. This margin is to diminish the issuers risk. The issuance is then backed as an income stream until expiry. First non mortgage backed issuance was done in 1998 so they have been around a long time as a financing method.

Going forwards the appetite for new issuance may be diminished if risks are perceived as too high same as tightening of consumer lending guidelines etc. The other risk is increased pricing for future issuance.

The risk still remains solely on the companies ability to successfully dispose. They have sufficient capital to cover losses if they occur for the foreseeable future.

Ezi I admire your optimism. The Pickles scenario you outline I cannot concur with. The clearance rate remains subdued around the country and there is no doubt disposal is a current issue and will be for the foreseeable future. On RTD it was a dog of a business and still is. That is why it hasn't sold. Like any business if it had merit someone would pick it up quickly and get on with it. They have still got it as nobody wants to pay anywhere near what they want. Current circumstance will not help as the assets it holds will also have reduced in value not to mention less cars on the roads = less accidents = less demand for services.

Again I am not down on ECX it is just an organisation that has a multitude of risks currently. Will it come good? Highly likely but how much damage is done in the meantime remains the unknown. That half yearly report will be crucial and anyone thinking of having a go would be wise to wait for that.