U.S. Distressed Debt Market Updatescorestat.com/assets/USDistressedMarket_NMMuellner_Final.pdf ·...
Transcript of U.S. Distressed Debt Market Updatescorestat.com/assets/USDistressedMarket_NMMuellner_Final.pdf ·...
U.S. Distressed Debt Market Update
N A O M I M U E L L N E R
V P P o r t f o l i o A c q u i s i t i o n s & I n s o l v e n c y I n v e s t m e n t S e r v i c e s
P R A G r o u p , I n c . , U n i t e d S t a t e s
P r e s e n t a t i o n f o r t h e
2 0 1 4 S C O R E 1 2 t h A n n u a l D e b t C o n f e r e n c e
N o v e m b e r 1 8 , 2 0 1 4
T o r o n t o , O N
Overview of Today’s Presentation
U.S. Macroeconomic Conditions
Unemployment
Consumer Credit and Debt Levels
Outlook
Headlines and Major Trends
Current US Debt Sale Market
US Public Debt companies
US Regulatory Environment
Outlook
Unemployment in the U.S.
The unemployment rate fell to 5.8% in October 2014, from 5.9% in September 2014, a six-year low
Income Levels Historical Trend
Personal and Disposable income levels have increased as a general trend
What does this mean for economic growth in the U.S.?
2014 Profile
U.S. household consumer debt(indebted households) profile:
Average credit card debt: $15,593
Average mortgage debt: $153,184
Average student loan debt: $32,511
In total, American consumers owe:
$11.62 trillion in debt
An increase of 3.4% from last year
$880.3 billion in credit card debt
$8.05 trillion in mortgages
$1,122.7 billion in student loans
An increase of 10.5% from last year
Credit Card Debt
Total CC Debt
Avg Household CC Debt
Avg Indebted Household Debt
August 2014 $880.3 Billion $7,274 $15,593
Change from July
-0.02% -0.09% -0.09%
Change from August 2013
3.19% 2.36% 2.36%
Change from July, annualized
-0.28% -1.09% -1.09%
Source: Federal Reserve Bank of New York
Credit Card Debt
Credit card debt is holding fairly steady
What does lower credit card debt mean for the economy?
Falling indebtedness is largely due to defaults rather than repayment
Source: Federal Reserve Bank of New York
Consumer Debt Outstanding
Percent of Balance 90+ Days Delinquent by Loan Type
Credit Card Charge off Rates
Consumer Bankruptcy Filings
0
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
Th
ou
sa
nd
s
CH 13s CH 7s
2014 – BK filings – expected down 16%; declining significantly for 4th year in a row 2015 – flat at best
Outlook
Continued slow recovery
Unemployment down to six-year low
U.S. credit card spending down, but falling indebtedness is largely due to defaults rather than repayment, and student loan debt still continues to increase.
Lack of traditional supply of distressed & bankruptcy consumer receivables.
Public Debt Buyers
0
400
800
1200
PRA Group Encore Capital
2008
2009
2010
2011
2012
2013
2014 YTD
Net Financial Receivables Purchased ($ in millions)
Public Debt Buyers
Source: FinViz
Headwinds
Regulatory uncertainty
Reduced charge-off volumes
Highly competitive pricing
Current U.S. Market
Tailwinds • Industry & Regulators – engaged &
communicating
• Regulatory influence creating significant barriers to entry
• US consumer lending thawing
14
Regulatory Environment
Approach to Global Debt Buying
High Price Pricing confidence, efficient operations, low cost of funds
Preserve their reputation No resale, compliant operations, trustworthiness
Be there when they need us Responsiveness, quick turnaround on proposals
Maintain large financial capacity Significant free cash flow and large credit line capacity
Be reasonable with contracts Fair negotiation, fulfillment upon obligations
Provide excellent post sale support Responsiveness, follow up, good communication
What Sellers Want What Buyers Must Deliver
N A O M I M U E L L N E R , V P P O R T F O L I O A C Q U I S I T I O N S ,
P R A G R O U P , I N C .
Recap and Questions
Fast Facts Our Business
A Specialized Financial and Business Services Company
Headquartered in Norfolk, Virginia
PRA was founded in 1996 and has been public since 2002. Its shares are publicly traded on the NASDAQ Global Select Market under the ticker symbol “PRAA.”
The company is distinguished by its strong customer focus, continuous innovation, and culture of integrity and compliance. The only debt buyer with true U.S., Canadian and European coverage.
PRA Group, Inc.