So CGF's capital structure and hence value would be very susceptible to a bond "crash" or sell-off.
It depends.
If it is just a broad-based bond sell-off we're talking about (i.e. a generic widening in credit spreads, and/or a rise in benchmark yields), CGF will be largely neutral, because the bulk of their annuity liabilities will also be revalued at a higher base yield and Illiquidity Premium (which is a function of credit spreads). That is exactly what happened in 2016H1 (see my previous post).
On the other hand, if the bond crash is driven by a large amount of actual defaults (failure to pay, restructuring, etc.) in the bond portfolio, or by a material widening of credit spreads specific to a particular sector (e.g. RMBS/CMBS), then CGF would indeed take a big hit in terms of PCA ratio, in all likelihood.
Let me know if there is anything unclear.
Why has the share dropped., page-82
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Last
$6.73 |
Change
0.100(1.51%) |
Mkt cap ! $4.651B | |||
| Open | High | Low | Value | Volume |
| $6.69 | $6.83 | $6.64 | $5.426M | 803.8K |
Buyers (Bids)
| No. | Vol. | Price($) |
|---|---|---|
| 1 | 4064 | $6.72 |
Sellers (Offers)
| Price($) | Vol. | No. |
|---|---|---|
| $6.78 | 100 | 1 |
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| Last trade - 16.10pm 09/08/2024 (20 minute delay) ? |
| CGF (ASX) Chart |