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Post by davidspindle on Feb 20, 2019 22:21:37 GMT
When the interest rate on the S******* Portfolio Loan was increased from 8 to 12% my reluctance to invest was overcome and I went in. Most of my Ablrate investment is in amortising loans so I have a fair cash churn, which has become steadily more difficult to re-invest due to lack of diversity, a slow rate of loan origination and an increase in the number of loans with difficulties. This has led to a cash drag and the offer of a parking place where “subject to normal conditions lenders will be able to allocate funds to, and withdraw from, the loan within a short space of time” and at a good rate became attractive.
I believe I saw some funds ‘Available For Immediate Sale’ (AFIS) after the first tranche closed and the second tranche opened. The AFIS went back to zero. As a test I put a small amount of my investment up for sale and it sold within an hour, although I did not notice it appearing in the AFIS.
The “Maximum Draw Down” figure for this loan is 6 million, which is far larger than any other single Ablrate loan. Other platforms have found that investors’ appetite for multiple tranches diminishes and that effect would be exacerbated by a decrease in rates for later tranches. If the rate is reduced for the two existing tranches it could trigger an exodus. If either occurs it could be interpreted as a deviation from ‘normal conditions’ and lock-in investors’ funds.
Caveat Investor.
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blender
Member of DD Central
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Post by blender on Feb 20, 2019 22:46:29 GMT
The 'overview' and the 'details' say 12% and the 'borrowing proposal' says 8%. No explanation on the platform for a new lender (that I can find).
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Post by ablrate on Feb 21, 2019 11:38:48 GMT
The 'overview' and the 'details' say 12% and the 'borrowing proposal' says 8%. No explanation on the platform for a new lender (that I can find). Thanks for that we will have it changed. The intention is that it is 12% from now on for a minimum of 6 months... there is no plan to reduce the rate back and the lender would be aware of the consequences of doing so
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blender
Member of DD Central
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Post by blender on Feb 21, 2019 12:42:01 GMT
The 'overview' and the 'details' say 12% and the 'borrowing proposal' says 8%. No explanation on the platform for a new lender (that I can find). Thanks for that we will have it changed. The intention is that it is 12% from now on for a minimum of 6 months... there is no plan to reduce the rate back and the lender would be aware of the consequences of doing so Should that be the borrower? The borrower might be even more successful with this funds raise if they committed to the 24 months term at 12%, but I imagine they know that.
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Post by ablrate on Feb 21, 2019 13:27:06 GMT
Thanks for that we will have it changed. The intention is that it is 12% from now on for a minimum of 6 months... there is no plan to reduce the rate back and the lender would be aware of the consequences of doing so Should that be the borrower? The borrower might be even more successful with this funds raise if they committed to the 24 months term at 12%, but I imagine they know that. yes it should be 'borrower' mea culpa
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Post by Ace on Feb 21, 2019 14:58:45 GMT
The borrower may be aware of the consequences but I'm not. Would someone mind spelling it out please.
If the borrower gets their £6m of funds by offering an initial 12%, what's to stop them from then dropping the rate to 8%? Surely the lenders would then be stuck in a loan they couldn't sell!
Try as I might, and I really want to having invested in ABLrate equity, I just can't see the lender benefits in these single company portfolio loans.
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Post by ablrate on Feb 21, 2019 15:49:02 GMT
The borrower may be aware of the consequences but I'm not. Would someone mind spelling it out please. If the borrower gets their £6m of funds by offering an initial 12%, what's to stop them from then dropping the rate to 8%? Surely the lenders would then be stuck in a loan they couldn't sell! Try as I might, and I really want to having invested in ABLrate equity, I just can't see the lender benefits in these single company portfolio loans. If the borrower dropped the rate to 8%, it would be material change to the lenders terms and would require repayment of the loan.
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n
Member of DD Central
Yet another Nick
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Post by n on Feb 21, 2019 15:51:27 GMT
Borrower! Lenders can't change the rate.
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Post by ablrate on Feb 21, 2019 15:58:58 GMT
Borrower! Lenders can't change the rate. don't know what you are talking about... nothing to see here..... (after a quick edit)
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blender
Member of DD Central
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Post by blender on Feb 21, 2019 16:25:44 GMT
Ace, you can be forgiven for being puzzled here because there has been some nifty footwork here (a much better expression than seat of the pants) through which this loan has been put on a proper footing at 12%, despite starting off at 8%. Borrower is wishing to increase borrowing swiftly despite a small problem with the latest temporary dip in the creditsafe report. Quite rightly, imo, Ablrate thinks 12% the appropriate rate, while the borrower is prepared at this stage only to commit to 12% for six months. Reducing the rate of the SPL after six months would not be tenable - especially for the poor lenders whose liquidity would be shot as well as their return. The solution seems to be to 'clarify' the terms of the loan, such that it is now a 12% loan with a term of 24 months, but with a minimum 'tranche' interest period of 6 months if it is prepaid. That 8% never happened. Clever stuff! They could use such imagination in the Brexit negotiations.
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Post by simert on Mar 15, 2019 19:41:10 GMT
Have I missed something? Where has the circa £300k that was available gone?
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Post by Ace on Mar 15, 2019 20:01:26 GMT
Have I missed something? Where has the circa £300k that was available gone? I think it's just a mechanism whereby the borrower elects to drawdown the current pledges when they need cash. I expect another tranche will be announced soon for new pledges. Or, perhaps they're trying to generate more interest by generating some rarity value
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Post by simert on Mar 15, 2019 20:05:03 GMT
Have I missed something? Where has the circa £300k that was available gone? I think it's just a mechanism whereby the borrower elects to drawdown the current pledges when they need cash. I expect another tranche will be announced soon for new pledges. Or, perhaps they're trying to generate more interest by generating some rarity value Ah ok. Makes sense thanks.
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Post by elephantrosie on Mar 20, 2019 2:14:10 GMT
300k++ reappeared
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