webwiz
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Post by webwiz on Jul 28, 2014 17:13:48 GMT
They have launched 3,4 and 5 year bonds which pay much more than on their p2p site. Does p2p have any advantage over bonds? If not then their bonds seem better than their p2p offering for periods of 3 or more years.
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Post by davee39 on Jul 28, 2014 20:25:06 GMT
The bond is a loan to Wellesley themselves, so if Wellesley cannot repay it you lose your money. From certain press reports it looks like it is not tradeable so you are committed to the full term with no exit.
The P2P loans are loans to companies which themselves have borrowed from Wellesley, these depend on the borrowers repaying, but should still be valid if Wellesley goes out of business. The loans have protection from the property assets, the provision fund and wellesleys own participation.
Certain reports indicate it is for £100m. If this for lending alongside P2P investors it suggests that the business is planning for very significant growth. The bond details will make very interesting reading.
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kermie
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Post by kermie on Jul 28, 2014 20:53:28 GMT
Yup, that's how I understand it too. I read just now in one broadsheet that they're looking at 7% for 5 years. Not clear if that's AER or something else. At first I was a bit miffed at the higher rate c/w their P2P offering, but in reality as a WF bond holder you are really not diversified at all, unlike a Wellesley P2P lender who now benefits from regular auto-re-matching across W's portfolio of loans...hence the small price premium. That said, when all's said n done, I'm not that convinced of the tales we hear about all loans being safely ring-fenced if the platform goes belly up (that's not aimed at Wellesley in particular - that's my view of P2P in general). If the proverbial hits the fan, someone's gonna lose some money somewhere. With that view in mind, it's tempting to throw a little money at the new WF bond - in for a penny, etc...
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sl75
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Post by sl75 on Aug 18, 2014 14:15:30 GMT
Yup, that's how I understand it too. I read just now in one broadsheet that they're looking at 7% for 5 years. Not clear if that's AER or something else. It's stated to be for 6-monthly payments (i.e. 2 per year). Assuming they're using "simple interest" as elsewhere, that would effectively be 3.5% per half-year, which assuming re-investment in a product with a similar return, results in an annual equivalent rate of about 7.1%. However, this seems at potentially significant additional risk compared to the P2P loans (which currently show a [not explicitly stated, you have to know how to calculate it yourself] annual equivalent rate about 6.0%, but described as 5.83% or 6.76% depending only on how often they pay the interest).
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kermie
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Post by kermie on Aug 27, 2014 18:01:00 GMT
FYI. Got an email today from W offering £100 cash back on their retail bond because I'm a regular lender with them.
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Post by uncletone on Aug 28, 2014 7:54:01 GMT
Me too. (Don't we all love "me too" posts?) Sadly, being still just a poor old age pensioner living off a Post Office account and a piggy bank, I cannot currently raise the £10K required.
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oldgrumpy
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Post by oldgrumpy on Sept 27, 2014 15:08:34 GMT
I wonder what impact recent advertising on TV has had on amount of cash coming in to Wellesley. Any stats on that yet, wellesleyco ?
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Post by wellesleyco on Sept 29, 2014 8:03:18 GMT
oldgrumpy the television campaign has increased the inflow of funds and significant traffic to the website.
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blender
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Post by blender on Sept 29, 2014 22:26:55 GMT
oldgrumpy the television campaign has increased the inflow of funds and significant traffic to the website. Increased rather than decreased? Wow! But perhaps grumpy was asking too much. More seriously, whatever the increase in funds, Wellesley should be congratulated for the TV advertising and thereby raising awareness among consumer lenders of the opportunities presented by the new p2p sector. If others also advertised it would be good for the sector generally and all platforms would benefit from the aggregate spend. Better than seeing all those sponging claims companies which are detrimental to UK business, whilst p2p is generally beneficial.
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Post by wellesleyco on Sept 30, 2014 8:56:35 GMT
blender thank you for your comment. We are very pleased to have the advertisement and while promoting Wellesley & Co and Peer-to-Peer lending, we have made sure that the risks are outlined in risk warnings on the advertisement. On the subject of risk warnings, how does the forum view the degree of risk warnings displayed by the Peer-to-Peer industry? They are an important part of being clear, fair and not misleading. The Peer-to-Peer lending industry would benefit greatly from establishing a name for itself for upholding the highest standards in this field. Avoiding mis-selling is of paramount importance to the sustainability of this industry. It would be great to hear opinions.
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shimself
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Post by shimself on Sept 30, 2014 14:16:42 GMT
I've taken the liberty of posting your Risks page in its entirety, seeing as I can get there without logging in My scattershot reactions:
It doesn't feel like a warning, and I think the property market price risk is somewhat underplayed. Thinking about it I am surprised you don't say in terms that the FSCS doesn't apply. Some companies who call themselves Crowd or p2p/p2b aren't actually that (ie the borrower owing money directly to the lender), at least one here and perhaps others. So your first sentence wouldn't be true for everyone.
WHAT ARE THE RISKS? Borrower Default
As with all peer-to-peer lenders, the biggest risk posed to investors is if one of their borrowers does not repay their loan, this means that lenders’ capital is at risk. Peer to peer lending involves matching savers who want a better return on their money with borrowers who require a loan at a fair interest rate.
Unlike traditional Peer-to-Peer lending companies, we only participate in secured lending which means that the total value of the loan is secured against an asset such as a property. If the borrower does not repay their loan then we can sell the property to cover any shortfall. We only lend to borrowers who have a good quality property that we believe could be sold readily.
If a loan goes into default we will automatically apply to the Provision Fund to cover any shortfalls in interest and capital that you suffer as a result. If the provision fund was unable to cover any losses of capital and interest we will contact you to make you aware that your borrower is in default and explain the next steps of the enforcement process that we will manage on your behalf. Operator Insolvency
If Wellesley & Co were to stop trading for any reason it would present some risk to you in that the firm would no longer be able to manage borrower repayments back to your account. We have taken a number of precautionary steps to ensure that in the unlikely event of our insolvency you would have protection.
All customer money that is not on loan is held in a segregated client money trust account with Lloyds Bank, Threadneedle Street, London. The security provided by a borrower in favour of the loan is held by an independent security trustee for the benefit of the customers of Wellesley & Co. We have made arrangements with our Security Trustee to take-over the administration of our customer loans in the case of Wellesley & Co no longer trading. The trustee will manage the day to day operations of Wellesley & Co to ensure that the platform can continue to be offered to existing customers and that all borrower payments of interest and capital are credited to your account as normal. The directors of Wellesley & Co have committed to assist the Security Trustee and the costs of operating would be covered by the Provision Fund.
Property Market Risk
Our loans are predominantly secured on residential or commercial property and the borrower’s ability to repay the loan would likely be affected if there was a dramatic downturn in the UK property market.
If such a situation were to occur our customers would have access to the Provision Fund which would consider all applications for compensation. If the balance of the Provision Fund were to be found insufficient as a result of multiple claims the management of Wellesley & Co would consider any further claims which may be repaid using the company’s loan capital. Interest Rate Risk
As with any fixed term loan or even bank term deposit there is a risk that interest rates could increase before the end of the committed term, which would mean that you would not be able to move your capital into a higher interest bearing loan until its maturity. Whilst this is not necessarily a risk to your capital and interest, it is a consideration that you should make before committing your funds.
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Post by wellesleyco on Sept 30, 2014 16:15:00 GMT
shimself. Thank you for your comment. I was referring more to disclaimers on marketing rather than the dedicated page relating to the risks. However your point is taken, valued and I shall look at tidying this up!
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webwiz
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Post by webwiz on Sept 30, 2014 16:53:39 GMT
If you look at the Savings Stream pages of this site you will see lots of discussion about what might happen if a loan defaults. It is clear that lenders do not know. This does not seem to indicate that the risks have been clearly explained.
It is common sense that a platform paying a rate of interest multiples above what any FSCS backed scheme can pay must have some sort of downside, presumably loss of capital. But the industry is so young and the platforms differ so much that I doubt that anyone, not even the platform operators, have much idea about the level of risk being taken on.
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sl75
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Post by sl75 on Oct 1, 2014 7:53:25 GMT
My own opinion is that the risks are inadequately explained for the marketing of the "Wellesley Savings Bond". At first glance, it appears at a similar risk level to Wellesley's other products (especially given that the misleading way in which the 5 year rate is given on the regular product makes it appear as only 0.24% difference in rates - in fact it would be just over a 1.1% annualised difference).
The actual risk profile seems to me comparable to the subordinated debt issued by banks, some of which is traded on the stock exchange.
7% yield seems to be about the market rate for such debt issued by a well-established and profitable bank. I'm unconvinced that Wellesley falls into a similar risk level yet... the additional yield for the "Savings Bond" (with very little protection) over the "peer to peer lending" (which appears relatively well protected, albeit not involving the FSCS) does not seem worth the extra risk to me, even after converting all the rates to annual equivalent rates.
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Post by ribble on Oct 2, 2014 14:21:14 GMT
I've taken the liberty of posting your Risks page in its entirety, seeing as I can get there without logging in Property Market Risk
Our loans are predominantly secured on residential or commercial property and the borrower’s ability to repay the loan would likely be affected if there was a dramatic downturn in the UK property market.
I'm probably showing my ignorance here (and if I am, I would welcome enlightenment) but a dramatic downturn in the UK property market would not necessarily entail a borrower's ability to repay, would it? However, in the event that a borrower was unable to repay, the value of the security might not be enough to cover the outstanding debt. Or am I just being pedantic?
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