99 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | SEPARATE FINANCIAL STATEMENTS 2022 BARBADOS PUBLIC WORKERS' CO-OPERATIVE CREDIT UNION LIMITED Notes to the Separate Financial Statements For the year ended March 31, 2022 (Expressed in Barbados dollars) 72 23. Financial Risk Management, continued Credit risk, continued Financial investments, continued Assessment of Corporate debt securities, continued Stage 3: There has been a default or significant event which has caused or is highly probable to have a significant impact on the investee’s ability to repay for which the assigned PD was the CPD rate. The investment credit rating has significantly declined. The company or investment classification family is considered speculative or in poor standing and subject to very high default risk or may be in default on some part of the its investment obligation. The above assumptions were the best case scenario for the Credit Union’s securities that are backed by the most reasonable and supportable data available at the time of the assessment. Key data sources as outlined in the expected credit loss assessment methodology were obtained from Moody’s, a global credit rating agency that provided published statistics and data on corporate and sovereign bonds and investments. Also used were the yield curves from the Central Bank of Barbados (CBB) and the Institute of Chartered Accountants of Barbados (ICAB). The expected credit losses computed were $6,387 (2021: $19,539) as at March 31, 2022 (Note 10). Incorporation of Forward Looking Information Assessment The Credit Union's forward-looking information, an IFRS 9 requirement, was modelled using its internal due diligence process and was included in the final ECL calculation for the year ended March 31, 2022. The below qualitative and quantitative indicators are used to assess whether it is likely that an investment or group/class of investments would change in the future: External Indicators - Market/Macro-economic specific shocks • Significant change in the performance of the investee compared with that of the market • Changes in expectations that the investee’s technical product milestones will be achieved • A significant change in the market for the investee’s products, global economy, economic environment in which the entity operates • Performance of competitors, matters such as fraud, commercial disputes, litigation, changes in management or strategy • Evidence of external transactions in the investee’s equity (take overs) Internal Indicators - Company specific shocks • Increasing/Declining revenues or margins • Increasing/Decreasing operating risks • Working capital deficiencies or improvements • Increase/Decrease in asset quality • Decreased/Increased balance sheet leverage
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