......you owe $bns the banks have a problem. My views on this...

......you owe $bns the banks have a problem.

My views on this share are very mixed.......I have traded it (mostly successfully) but am holding fire at the moment.

My issues (and source of mixed views) are as follows :
1) the cashflow to service debt is present but the capital values are possibly/probably not.....
2) the quality of the CRE is generally good - with good quality tenants (as per webcast - half year results, and primarily food so a recession resistant tenant.

So with quality CRE and service ability you would think this would survive BUT we have to ask ourselves what about the credit crunch......

If you were a banker being asked to re-finance a property which had the potential for declining capital values what would your answer be ? I know mine would be no - unless I could mitigate my risk by lending at a lower LVR (loan to value ratio). It doesn't even matter about the interest rates - its ALL about credit risk - the credit crunch will crush SP's of financials and banks...so what do they do ?

They become more conservative - back to traditional lending practices.

Given recent events in US with inv bank being bought for $2 a share - are US banks going to be any different to local banks in terms of viewing a re-fi of declining property values.......my view would it would not.

So in my view a re-fi is going to be unlikley ......but the banks have a problem......they need to clean up own their balance sheets - without a loss....

What do banks want - their position being taken out - Period - end of story. How will they do this - either by the forced sale of assets or a white knight coming in....

Why would an equity provider seek to take over the Centro position ? With all its debt.....just to take out the banks - no they want value - that is what vulture capitalism is all about.

If anyone has cash for property now - they have a multitude of opportuntities worldwide - just look at the Rubicon's (AFG's property trusts) for example.

Centro are stuck in the middle - good performing assets that are servicing debt - but capital values are falling in the tightest credit market "since the Depression" (quoted in AFR today).

So where does it finish up - the debts are being serviced but no white knight is probably going to show up.....

Whilst many properties will be ring-fenced - my concern is any unsecured debt and any potential debt which has any margin calls in the T's and C's associated with any debt.....

If these debts can be "ring-fenced" and isolated/re-negotiated CNP may survive (in my view) because the banks have a problem not just CNP.

If however there was ANY hint of no serviceability of the debts the whole thing would come down like a pack of cards....

Having seen the new MD in action - I would have confidence in his abilities but he is swimming against the tide and even the strongest swimmer would get beaten back.

So will CNP survive - probably - because the secured banks have a problem and can't afford to put them under. It is any unsecured banks that worry the hell out of me and present in my view the possible source of CNP's demise if the credit crunch gets deeper and S&P starts looking at unsecured potions and re-aligning ratings......

For me at worst CNP is a very high risk investment which I am staying out of until I have clarification of the banks positions within the credit squeeze in general and CNP in particular.

I hope CNP does survive and for all the investors in it - I hope it turns out okay - but it is a hot potatoe which may leave a few banks with burnt fingers.

These are just my thoughts (and unfortunately as an ex-banker myself).

Please DYOR and good luck for all holders but I am out until I get more clarification/comfort from their financing