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We estimate that 65% of this hedged position (on a value basis) is with Centrica.
Otherwise recovery is on an actual cash value basis that makes an adjustment for depreciation.
We also think they are expensive on a price-to-adjusted book value basis, which is adjusted for things like pension liabilities and nonconsolidated debt.
"On a relative value basis, Hong Kong appears expensive while many assets in the European Union are attractively priced, owing to depressed economic conditions," it wrote.
On a net present value basis, these are worth $2 billion, nearly double the equity premium being offered to Allegheny shareholders.
But the company said it would have a capital deficit of $46.4 billion if it calculated its securities on a "fair value basis," or according to what they would fetch in the market.
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"Any reshaping of the portfolio will only be done at full-value basis," he said.
It is computed on a present-value basis, reflecting how long it will be before an employee starts to collect a pension.
With most property lending made on a loan-to-value basis, the result is that banks are poised to ask borrowers to stump up more equity.
"It's not as though [AstraZeneca] is not going to get a benefit," said Shay. "It's only a question of the value of the benefit on a present-value basis.
On a fair-value basis, which assumes that all assets and liabilities are realised immediately, Freddie had negative net worth of $5.2 billion at the end of the first quarter.Clearly, if the pair continue to lose money for much longer, their capital base will be eroded.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com