106 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED Barbados Public Workers’ Co-operative Credit Union Limited Notes to the Consolidated Financial Statements March 31, 2026 (expressed in Barbados dollars) 74 24 Financial Risk Management …continued 24.2 Credit risk …continued Sovereign debt securities - Government of Barbados …continued Assessment of Sovereign Debt Securities As of March 31, 2026, the Credit Union’s holdings in Government Securities relating to the Series B and D bonds were classified as POCI (Purchased or Originated Credit Impaired) with an associated ECL of $28,231 (2025 - $71,683). At March 31, 2026, the balance was $14,600,389 (2025 - $15,982,626) with a weighted average effective rate of 3.78% (2025 - 3.77%). The derecognition loss of $3,634,651, which was initially recognised, was reported at $1,432,264 (2024 - $1,755,158) at March 31, 2026. POCI financial assets are assets that are credit-impaired on initial recognition. The Government of Barbados bonds are carried at lifetime ECL, which was incorporated into the calculation of the credit-adjusted effective interest rate on initial recognition. Only the change in ECL gives rise to an impairment gain at the end of each assessment period. Assessment of Amortised Cost Fixed Income Securities Sovereign debt securities - Government of Barbados The Credit Union held sovereign debt securities totaling $52,857,143 as at March 31, 2026 (2025 - $10,000,000), comprising $40,000,000 (2025 - $10,000,000) invested in Fixed Income Government of Barbados (GOB) BOSS Bonds Plus and $12,857,143 (2025 - $Nil) in Queen Elizabeth Hospital (QEH) Bonds. These investments are measured at amortised cost and carried a weighted average coupon rate of 4.93%. The related expected credit loss (ECL) allowance amounted to $61,896 as at March 31, 2026 (2025 - $40,121). Assessment of Corporate debt securities As at March 31, 2026, the Group held debt securities with the Barbados Port Inc. (BPI) with a carrying value of $13,400,000 (2025 - $11,764,500) with an average weighted effective yield of 5.80% (2025 - 5.71%). An ECL assessment was performed as required by IFRS 9. This assessment on these debt securities measured at amortised cost utilized the methodology as outlined below: • Due to the lack of published statistical data and the lack of an active market for securities, Moody’s Investors’ assessment on Sovereign default and recovery rates, 1983 to 2024, was used to provide the cumulative default rates (CDR) for categories of bonds similar to Barbados. This gave the cumulative probability of default over a 10-year period. • The recovery rate was aligned to a senior unsecured bond using Moody’s average corporate debt recovery rates measured by trading prices for the BPI bonds. • The discount rate applied was the effective interest rate for amortised cost financial instruments. The staging methodology which was applied to term deposit was also applied to the corporate debt securities.
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