brianlom1
Member of DD Central
He's not the Messiah, he's a very naughty boy!
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Post by brianlom1 on Dec 11, 2018 12:30:08 GMT
My biggest complaint with P2P is with platforms that string things out, tying up my cash for years before bowing to the inevitable haircut (or, even worse, bad debt). I would love for those platforms to do what Abl have done here (get involved early, negotiate a deal, give me the choice to get out at a loss or stay in for the long haul albeit on less favourable terms).
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blender
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Post by blender on Dec 11, 2018 12:39:10 GMT
Not at all like FC in my book. For a start FC's computer would probably not have touched this in the first place, and in the present situation defaulting would be automatic. Ablrate is far more engaged with each loan and with the borrower 'network' as customers - extending into the handling of problems which have impacts on other loans. The valuation of the security plant for this loan was not undertaken for Ablrate and only looked like security if the loan was amortising. Ablrate says that the first concern at present was to preserve the principal, and it is clear that the guarantor was not good for the balance under default and sale of assets (which is like FC). If he was worth £1M, then surely, the interests of the lenders would have been be served by an immediate default and appointment of an administrator - taking control. The preservation of the principal for two years through this revised soft arrangement looks unlikely to me. 16%? Sure, if you can buy at 88% and sell later at par. Good luck with that.
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Post by ablrate on Dec 11, 2018 13:06:31 GMT
Sold a little at 88 today, having bought it at 87 a couple of days earlier. Trivial sums, but I think it shows that the market is still trying to find it's level. Given the imbalance between bids and offers, my guess is that whatever action is taking place at the moment is mostly from buyers taking offers, rather than sellers taking bids.
As ablrate has said, at 88-90% the yield to a buyer is 15-16%, which is definitely in the ballpark for a loan like this, don't you think?
I tend to agree but as you say selling £10 here & there is no use at all if you have a significant holding, unilaterally forcing holders to accept half the market rate that the loan actually warrants & massively increased risk of a bullet payment without any alternatives is simply not acceptable. For a supposedly strong loan that had passed all platform DD to have proved so fundamentally weak as to require such a generous reduction highlights the weakness of the asymmetric P2P risk model; where platforms take the majority of their fees upfront & then as & when any trouble occurs they simply shaft lenders with the smelly end of the stick & is a real shame as Ablrate was shaping up to be a standout platform for doing things differently. They have proved with their treatment of lenders in this case that they are no different to the FC's of this world & can not be trusted to have the interests of lenders as a priority. We don't take the majority of our fees upfront, this is incorrect. The majority of fees is taken over the term of the loan in the spread. The 'generous reduction' you discuss is the same rate as would have been achieved under an amortising loan at 14% and the capital has amortised down to 73% of the initial loan. There has been no debt forgiveness. What has changed is that it is no longer amortising, which has changed the risk profile. Your assertion that we do not have the interests of lenders as a priority is also incorrect. When a loan is delinquent, we have to look at all aspects of the loan going forward, such as Administration/ Liquidation or the trading of the firm going forward. Our only purpose is to gain the maximum we can for lenders, in many cases this would be putting the company into administration, in other cases it is to allow the business to continue to trade. I would also say that we do this at our cost. Putting a company into Administration is expensive and the nature of Administration is that the business immediately suffers. If a business can continue and the security be maintained, while an orderly and measured approach to recovery takes place to recover 100% capital then this is the preferred option. When there is also a continued coupon then that is the more favorable option If you are going to lend money, you have to be aware that circumstances like this can occur and there needs to be flexibility to gain full recovery. Maintaining the original terms was not possible, administration would have been expensive, would have taken a couple of months at least (as these things inevitably do) and there would have been no interest payments. This solution allows a coupon to be paid and the business the time to repay the capital on the loan through refinancing or an equity issue, if this can be solved within the coming months then it is by far the best option for lenders and the company. You are, of course, entitled to your opinion, and I do appreciate the frustrations but as we say on every page of the site and every document issues, that there is a risk when lending money. When things do go wrong, we aim to do whatever we can to gain our lenders the best result. To suggest otherwise is simply not true.
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ganymede
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Post by ganymede on Dec 11, 2018 13:32:55 GMT
I tend to agree but as you say selling £10 here & there is no use at all if you have a significant holding, unilaterally forcing holders to accept half the market rate that the loan actually warrants & massively increased risk of a bullet payment without any alternatives is simply not acceptable. For a supposedly strong loan that had passed all platform DD to have proved so fundamentally weak as to require such a generous reduction highlights the weakness of the asymmetric P2P risk model; where platforms take the majority of their fees upfront & then as & when any trouble occurs they simply shaft lenders with the smelly end of the stick & is a real shame as Ablrate was shaping up to be a standout platform for doing things differently. They have proved with their treatment of lenders in this case that they are no different to the FC's of this world & can not be trusted to have the interests of lenders as a priority. We don't take the majority of our fees upfront, this is incorrect. The majority of fees is taken over the term of the loan in the spread. The 'generous reduction' you discuss is the same rate as would have been achieved under an amortising loan at 14% and the capital has amortised down to 73% of the initial loan. There has been no debt forgiveness. What has changed is that it is no longer amortising, which has changed the risk profile. Your assertion that we do not have the interests of lenders as a priority is also incorrect. When a loan is delinquent, we have to look at all aspects of the loan going forward, such as Administration/ Liquidation or the trading of the firm going forward. Our only purpose is to gain the maximum we can for lenders, in many cases this would be putting the company into administration, in other cases it is to allow the business to continue to trade. I would also say that we do this at our cost. Putting a company into Administration is expensive and the nature of Administration is that the business immediately suffers. If a business can continue and the security be maintained, while an orderly and measured approach to recovery takes place to recover 100% capital then this is the preferred option. When there is also a continued coupon then that is the more favorable option If you are going to lend money, you have to be aware that circumstances like this can occur and there needs to be flexibility to gain full recovery. Maintaining the original terms was not possible, administration would have been expensive, would have taken a couple of months at least (as these things inevitably do) and there would have been no interest payments. This solution allows a coupon to be paid and the business the time to repay the capital on the loan through refinancing or an equity issue, if this can be solved within the coming months then it is by far the best option for lenders and the company. You are, of course, entitled to your opinion, and I do appreciate the frustrations but as we say on every page of the site and every document issues, that there is a risk when lending money. When things do go wrong, we aim to do whatever we can to gain our lenders the best result. To suggest otherwise is simply not true. Well said, I expect with their biggest customer going leaving them with two problems unpaid for deliveries with no expectation of payment so a lack of cash, and excess of stock which they can't sell until they establish new replacement customers, reducing the revenue stream.
Some drinkers might consider helping out a little with the excess stock. Don't drink myself, but not stopping anyone else.
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Dec 11, 2018 15:49:40 GMT
Their biggest customer indirectly is still trading and still sticking & selling their beer. I would surprised if this was existing stock. Long term whether the tie continues post sale is probably a bigger issue.
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Post by Ace on Dec 11, 2018 23:39:29 GMT
I tend to agree but as you say selling £10 here & there is no use at all if you have a significant holding, unilaterally forcing holders to accept half the market rate that the loan actually warrants & massively increased risk of a bullet payment without any alternatives is simply not acceptable. For a supposedly strong loan that had passed all platform DD to have proved so fundamentally weak as to require such a generous reduction highlights the weakness of the asymmetric P2P risk model; where platforms take the majority of their fees upfront & then as & when any trouble occurs they simply shaft lenders with the smelly end of the stick & is a real shame as Ablrate was shaping up to be a standout platform for doing things differently. They have proved with their treatment of lenders in this case that they are no different to the FC's of this world & can not be trusted to have the interests of lenders as a priority. We don't take the majority of our fees upfront, this is incorrect. The majority of fees is taken over the term of the loan in the spread. The 'generous reduction' you discuss is the same rate as would have been achieved under an amortising loan at 14% and the capital has amortised down to 73% of the initial loan. There has been no debt forgiveness. What has changed is that it is no longer amortising, which has changed the risk profile. Your assertion that we do not have the interests of lenders as a priority is also incorrect. When a loan is delinquent, we have to look at all aspects of the loan going forward, such as Administration/ Liquidation or the trading of the firm going forward. Our only purpose is to gain the maximum we can for lenders, in many cases this would be putting the company into administration, in other cases it is to allow the business to continue to trade. I would also say that we do this at our cost. Putting a company into Administration is expensive and the nature of Administration is that the business immediately suffers. If a business can continue and the security be maintained, while an orderly and measured approach to recovery takes place to recover 100% capital then this is the preferred option. When there is also a continued coupon then that is the more favorable option If you are going to lend money, you have to be aware that circumstances like this can occur and there needs to be flexibility to gain full recovery. Maintaining the original terms was not possible, administration would have been expensive, would have taken a couple of months at least (as these things inevitably do) and there would have been no interest payments. This solution allows a coupon to be paid and the business the time to repay the capital on the loan through refinancing or an equity issue, if this can be solved within the coming months then it is by far the best option for lenders and the company. You are, of course, entitled to your opinion, and I do appreciate the frustrations but as we say on every page of the site and every document issues, that there is a risk when lending money. When things do go wrong, we aim to do whatever we can to gain our lenders the best result. To suggest otherwise is simply not true. ablrate, while I share some of Butch's frustrations, I do appreciate your response. However, it is simply untrue to state that an interest-only loan at 8% is the same rate as an amortizing loan at 14%. It may well be that the total amount of interest paid will be the same, but this does not equate to it being 'the same rate'. IMO Butch is quite correct to say that the borrower has received a 'generous reduction' as the borrower is now able to borrow the full remaining capital for the remaining term. Investors are now unable to redeploy monthly capital repayments to achieve 'the same rate'.
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TitoPuente
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Post by TitoPuente on Dec 12, 2018 8:24:51 GMT
I share the opinion that the restructuring has been overly benevolent, but I can live with that if capital is recovered. This loan should be followed closely and should be exited as soon as there is an opportunity, but the lower rate is probably an incentive for the borrower to delay such exit. Having said that, I find Ablrate's total confusion about interest rates disturbing. Stating that a 14% amortising loan is the same as an 8% bullet is utter nonsense. Even when the amount of interest received is the same, the second loan does not release capital to be redeployed. I wonder if this confusion is due to lack of knowledge or intention to mislead. Both options are bad.
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SteveT
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Post by SteveT on Dec 12, 2018 9:16:00 GMT
It might have been better to say "Under the new terms, the total £ interest to be paid by the borrower to Ablrate lenders over the remainder of the loan is the same as would have been payable under the original terms. However, the remaining balance of capital will not be payable until the end of the loan".
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IFISAcava
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Post by IFISAcava on Dec 12, 2018 9:26:20 GMT
It might have been better to say " Under the new terms, the total £ interest to be paid by the borrower to Ablrate lenders over the remainder of the loan is the same as would have been payable under the original terms. However, the remaining balance of capital will not be payable until the end of the loan". And to be upfront that this would mean a loss on any interest that would have been available from reinvestment of capital (which they do take account of in their quoted AERs)
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Post by ablrate on Dec 12, 2018 10:01:57 GMT
I am aware of the difference in returns between amortising and IO but was attempting to give those who were comparing headline rates, some perspective
I think, however, that in the maelstrom of a restructured loan that point has been missed, so I will stop commenting on this and let you guys duke out the best way to phrase it!
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Post by Butch Cassidy on Dec 12, 2018 10:05:12 GMT
I share the opinion that the restructuring has been overly benevolent, but I can live with that if capital is recovered. This loan should be followed closely and should be exited as soon as there is an opportunity, but the lower rate is probably an incentive for the borrower to delay such exit. Having said that, I find Ablrate's total confusion about interest rates disturbing. Stating that a 14% amortising loan is the same as an 8% bullet is utter nonsense. Even when the amount of interest received is the same, the second loan does not release capital to be redeployed. I wonder if this confusion is due to lack of knowledge or intention to mislead. Both options are bad. Just to be totally clear I have no problem with restructuring loans to preserve jobs, capital & future returns - I often lobby for it across the thousands of SME loans that I make, neither do I baulk at making losses it is part & parcel of SME lending.
I do however find it unacceptable that I buy a barrow load of apples & then it is unilaterally exchange for half a bucket of lemons & I am told "nothing has changed" & would concur with the "utter nonsense" view given above. I'm prepared to give ablrate the benefit of the doubt that in a desperate, grasping at straws attempt to justify why this is not an overly generous restructuring the language used could have been more accurate. I would also point out that trust & confidence in a platform is hard won yet can easily be lost through both careless actions & language. We are being asked to trust the platform's judgement is in our best interests but that is a two way street & such trust needs to be demonstrated that it is well placed & deserved. Having seen the "container guy" run rings around the platform for c. 3 years & seemingly no closer to a resolution I am yet to be convinced that such kicking the can down the road exercises are in the best interest of lenders.
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blender
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Post by blender on Dec 12, 2018 16:13:23 GMT
Not kicking the can. Rolling it gently on a long, soft carpet.
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Post by ladywhitenap on Dec 12, 2018 19:27:35 GMT
ablrate Can you say when we might get an update on rest of these loans please? TIA LW
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Post by ablrate on Dec 13, 2018 9:14:31 GMT
ablrate Can you say when we might get an update on rest of these loans please? TIA LW We are working through it and have a call later on today to discuss the proposals
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blender
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Post by blender on Dec 13, 2018 12:05:43 GMT
ablrate Can you say when we might get an update on rest of these loans please? TIA LW We are working through it and have a call later on today to discuss the proposals Proposals? How about an update on the events on 67&68?
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