There is one thing that we can be sure of, and that is that CCP's management know exactly what its competitors do (e.g., effective amortisation calculations, forward selling of collectables, sources of funding, and other things), and they would know the effects of these in respect to profitability and cashflow over time. Also, they would know how major debt sellers view individual debt buyers in respect to what may reflect negatively on the reputation of the sellers.
Consequently, you can read a great deal into the reason advanced for the rare capital raising in April. Part of the 1 April Announcement reads:
“Aus/NZ debt buying: Maximise the opportunity to participate in a potential re-balancing of the Aus/NZ debt buying market should conditions improve. Capital availability to the sector is tightening and there is increasing credit issuer compliance sensitivity. The Offer provides additional financial capacity to enable Credit Corp to benefit from these dynamics.”
When I read those words, I concluded that it was polite circumlocution to the effect that CCP's competitors in Australasia are going to have funding and reputational issues that would advantage CCP, and it wants to be financially able to optimise that turn of events. I also recall a few years ago when CCP cut back on buying PDLs, that the reason given was that competitors had tapped into new sources of funding, and pushing up the price of PDLs beyond what CCP was prepared to pay.
By the way, it is probably more important to watch for any faults in CCP, rather than being too blinded by the positives, but that does not mean we should invent problems that do not exist.
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