There are three main types of
loss assumptions used in the LAFA data series that extend the core series: (1) loss from primary (e.g., farm) to retail weight, such as damage during harvesting and processing, (2) loss at the retail level (e.g.
Meanwhile, the BFSRs of Bank Audi, Blom Bank and Byblos Bank are unaffected as Moody's believes that their adequate capitalisation enables them to absorb a level of stress in line with Moody's expected
loss assumptions.
The second objective is to attempt to suggest some objective thought into the selection of vacancy and credit
loss assumptions. Third, this study addresses the issue of reasonableness when comparing the vacancy and credit
loss assumption in a direct capitalization analysis, the assumptions presented in a DCF analysis, and the sales comparison approaches for income-producing properties.
This difference in result is caused by the change in the net business casualty
loss assumptions ([ILLUSTRATION FOR FIGURE 3 OMITTED] includes the $2,500 business casualty and theft net loss of Example 4 rather than the $1,500 net gain of Example 3).
Loss coverage provided by the structure is in excess of Fitch's expected net
loss assumptions. Structural features and various triggers also help mitigate dealer default risk and OEM bankruptcy.
However, the rating agency notes that the bank's current capitalisation is pressured by low loan loss reserves (LLRs) coverage and further provisioning needs, resulting in a projected decline in the bank's capital adequacy metrics by around 8%-9% applying Moody's expected
loss assumptions under central stress-test scenario.
Also, a sovereign downgrade may result in increased
loss assumptions used for modelling, the agency added.
The bank financial strength ratings (BFSRs) of ACBA-Credit Agricole and Ardshininvestbank are unaffected as Moody's believes that their adequate capitalisation enables them to absorb a level of stress in line with current
loss assumptions.
The underlying assumptions used to calculate the net present value (NPV) of residual assets include credit and
loss assumptions, prepayment assumptions and an appropriate discount rate.
