If you require any personal advice or recommendations, please speak to an independent qualified financial adviser. No content should be relied upon as constituting personal advice or a personal recommendation, when making your decisions. The content provided has not taken into account the particular circumstances of any specific individual or group of individuals and does not constitute personal advice or a personal recommendation. Any opinions expressed are the opinions of the authors only. We have taken reasonable steps to ensure that any information provided by The Motley Fool Ltd, is accurate at the time of publishing. I’m considering adding it to my portfolio after Barclays when I have some more free cash. Ultimately, the stock does appear to be good value even with the recent jump. This could provide a catalyst to grow market share in the future. Yet given the performance last year, the company has good cash position that it can make use of for long-term growth via investments. I expect energy prices to come back under control, and could fall off sharply in certain situations (such as peace in Ukraine/easing tensions with Russia). One concern I have is whether this kind of performance can be replicated going forward. The 2022 figure excludes the value of disposed Spirit Energy assets. This contrasts to the 2021 figure of £392m. To put this in perspective, the preliminary 2022 results showed an adjusted operating profit of £2,823m. Why has the business been doing so well? The company pointed to “strong gas production and energy generation against a backdrop of higher commodity prices and strong management of increased commodity volatility”. In contrast to Barclays, Centrica shares recently touched 52-week highs. The stock has risen by 32% over the past year. With a P/E ratio of 5.12, Centrica ( LSE:CNA) is also potentially undervalued. Senior leadership needs to get a grip on risk management when it comes to this area. One risk I’m aware of is the trading division, which had a costly blunder worth several hundred million dollars in the last quarterly update. I’m just waiting to see if there’s any further short-term weakness in the next week or so. I’m very interested in picking up some Barclays shares over the coming month. The bank is diversified by generating revenue from a host of sources, ranging from retail customers to corporate clients and institutional funds. A sudden deterioration in asset performance could lead to higher levels of credit events and losses for the structure, which in turn would put pressure on the credit enhancement levels, particularly at the bottom end of the structure.To be clear, I don’t agree with the market-induced sell-off in big banks, particularly Barclays. The transaction is susceptible to the performance of the underlying assets. This expectation is reflected in the ‘CCsf’ and ‘Csf’ ratings on the class C, D and E notes. The analysis also showed that further loss allocation can be expected at the bottom end of the structure, where the class E notes presently have losses allocated to their full outstanding balance, while the class D notes’ allocated loss equates to 7% of their balance. The analysis showed that the level of credit enhancement available at the top end of the structure is sufficient to meet the expected losses and for this reason the agency has upgraded the class A+, A and B notes to ‘AAAsf’ and ‘BBBsf’. Given the second-lien nature of the portfolio and the low levels of recoveries achieved following the sale of the underlying assets, Fitch has assumed zero recoveries on loans presently defined as credit events and any future loans expected to meet the credit event definition. As of June 2013, the credit enhancement available to the class A+ and class A notes was 91% and 70.6%, respectively, (compared with 17% and 14% at transaction close). The notes in the structure are amortising sequentially, which has resulted in a significant build-up in credit support available to the top of the structure. Meanwhile, EUR4m of loans have been liquidated with reported period loss severities ranging between 64% and 115%.Ĭredit Enhancement Sufficient to Withstand Rating Stresses According to the investor reports, the reduction has largely been driven by the removal of loans due to ineligibility with the warranties, which over the past year amounted to EUR9.1m. In addition, loans defined as credit events have declined to EUR36.1m (23% of the then current balance) from EUR49m in June 2012 (24.9%). Over the past 12 months the volume of loans in arrears by more than three months (excluding credit events) has remained stable at under EUR1.5m.
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