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Post by Ton ⓉⓞⓃ on Oct 27, 2015 9:49:31 GMT
It's somewhat interesting with variable interest rates, looking at the t&c's it, to me at least, looks like I'll be lending effectively to wiseAlpha and not these large safe businesses can anyone confirm or deny this? Also am I right in thinking that if I become a Lender I'm exposed not only to the risk of the Borrower, but also the risk of the Seller (i.e. the Bank that originated the loan) and the risk of wise Alpha getting into trouble (three layers of risk)? Yes, the variable rate caught my attention as we might not live in a zero yield environment forever and there are not many offers with variable rates that already pay a decent yield right now. My understanding is that client money and the loans backing the notes are ring fenced and held by a third party custodian/trustee, mitigating any credit risk with the platform. I think you're right, after my first post I read in the FAQ that they've tried to set it up in a way that if insolvency ever occurred the these assets should be isolated from the insolvent business, but I also noted that they said the loans would probably be sold as a result and the proceeds paid over to the Lenders (I imagine), but selling these assets (our loans) doesn't strike me as the best way forward as you might be selling at a loss. Hopefully the Lenders would get a vote, but elsewhere voter rights are negated; so I'm not sure what would happen.
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Post by Deleted on Oct 27, 2015 10:17:17 GMT
"Not exactly generous, is it? And no easy sell-out"
says it all
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Post by Ton ⓉⓞⓃ on Oct 27, 2015 10:34:21 GMT
"Not exactly generous, is it? And no easy sell-out" says it all I see it as a hedge against other products. Perhaps not generous right now but could be. I still would like the other questions answered...
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adrianc
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Post by adrianc on Oct 27, 2015 11:22:57 GMT
I see it as a hedge against other products. Perhaps not generous right now but could be. Potentially, yes - and that's very much the mind I looked at it with. Nice safe corporate bonds? Don't mind if I do, all things being equal. But 4.1% after fees from the average of the current market? With hard 4-6yr lock-ins? Compare with RS's 5yr market, and it's over 200 basis points short, with more much lock-in. That's a very big and fast rise in LIBOR needed to make that competitive. I'll leave others to define the finer points of which is safer, but (to my inexpert mind) they're not far apart. Even if the rates and lock-in were comparable with RS, on balance I'd rather be a slightly safer sheep than up there at the edgy end of the tiny platforms.
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Post by reeknralf on Oct 27, 2015 11:29:34 GMT
"Not exactly generous, is it? And no easy sell-out" says it all Ratesetter 5 yr's at 5.9%, so if libor over the next 5 years averages perhaps 1.5%, wiseAlpha might be better. All else being equal, I'd take 5% over base rate ahead of a flat 6%. There remains the separate question of how likely you'd be to actually get either the 5% or the 6%.
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adrianc
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Post by adrianc on Oct 27, 2015 11:45:31 GMT
Ratesetter 5 yr's at 5.9% There remains the separate question of how likely you'd be to actually get either the 5% or the 6%. Mmm. Much debate on the RS board about the easy-my/your/our-rate figures... The RS last-matched is currently 6.1%, and there's only £60k at 6.3% and below, so 6.4% should match today easily. My RS 5yr money, invested over the last year, is currently at an average of 6.4% - and that's without 1% straight off for fees - so it's actually 6.4% vs 4.1%. More than half as much return again... Perhaps more than 5.1% before fees is achievable, but there's no track record obvious to say that. As far as rising rates go, don't forget that if you put £1k in RS 5yr, then - barring early repayments - you'll have had half of it back and reinvested by the half-way mark.
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Post by Wisealpha on Oct 27, 2015 12:01:21 GMT
Ton,
Thanks for letting us know about the thread here. I'm in the customer service team at wiseAlpha and we are more than happy to answer any questions by phone or email. From the thread to clarify a few things:
- wiseAlpha purchases the underlying loans and issues wiseAlpha Notes (similar characteristics to a bond) to investors which are backed by the specific loan that our members want to invest in. The Notes mirror the economic terms of the loan and any changes to that loan that happen in the future. We do this so that investors can invest small amounts in different loans.
- the underlying companies all have at least several hundred million in revenue sometimes multi-billion revenues are are established corporates so it is a different market to the small business lending end of the spectrum and consequently the interest rate reflects the different company risk profile. Having said that we are not that dissimilar in returns to the largest P2P business lending platforms, it's the risk profile that is more of a corporate nature
- the floating rate/variable nature of the loans means that as the Bank of England rate and consequently Libor increases the rate on the loans will increase (you can see this in the yield to maturity)
- we have decided to extend our 0% fees for life (on the amounts invested by the deadline) offer to all new investors (it was originally for invitees to our launch party)
- We outline what happens in the event of an insolvency at the main operating company in our Key FAQs tab. All assets (i.e. the loans) are held in a separate company administered by a $40bn global independent administrator so if something happened to the platform the administrator would call a meeting of the Noteholders (investors) and ask them whether they want to continue receiving their interest and wait till the loan matures or sell the assets in an orderly fashion. We obviously don't intend for that to happen but the risks are outlined so investors are aware of what would happen in that event
- we expect to expand the range of loans in the near future as well
I hope that helps but please don't hesitate to direct any questions to our customer services team and we can clarify any matters.
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david42
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Post by david42 on Oct 27, 2015 12:25:51 GMT
WisealphaWelcome to the forum. It is very helpful to have clear and official answers to the questions that are being discussed. The forum welcomes (and encourages) input from staff of P2x platforms, however to ensure everyone is aware you represent a specific company, the forum rules require you to send a PM (Private Message) to Admin. If you have not already done that, please do so by clicking here so your account can be updated. Thank you
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Post by reeknralf on Oct 27, 2015 13:12:14 GMT
Ratesetter 5 yr's at 5.9% There remains the separate question of how likely you'd be to actually get either the 5% or the 6%. Mmm. Much debate on the RS board about the easy-my/your/our-rate figures... The RS last-matched is currently 6.1%, and there's only £60k at 6.3% and below, so 6.4% should match today easily. My RS 5yr money, invested over the last year, is currently at an average of 6.4% - and that's without 1% straight off for fees - so it's actually 6.4% vs 4.1%. More than half as much return again... Perhaps more than 5.1% before fees is achievable, but there's no track record obvious to say that. As far as rising rates go, don't forget that if you put £1k in RS 5yr, then - barring early repayments - you'll have had half of it back and reinvested by the half-way mark. You're squeezing the RS figure up and the WA down to suit your argument. If I put money into both, today, it's 6% vs 5%. As you say RS pays back the capital through the term so if bank rates went up 0.5% per year, and RS rates track this you average 6.25% (half your money for half the term earns 7%, the rest earns 6%) cf 6% with WA. RS wins. But if rates go up 0.75% per year, you average 6.375 at RS and 6.5% at WA. The exact trade-off depends on exactly how much and when bank rates go up, and is a non-trivial calculation, but this is the basis for my 'libor averaging 1.5%' comment earlier. libor rising to 3% by 2020 does not seem implausible to me.
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adrianc
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Post by adrianc on Oct 27, 2015 13:28:44 GMT
You're squeezing the RS figure up and the WA down to suit your argument. If I put money into both, today, it's 6% vs 5%. No, I'm really not. As I said, the RS last-matched figure is currently showing as 6.1%, as is the "lend now" rate - but they are widely disparaged. I have some sitting at 6.5% (a repayment from this morning) which I expect to go in the next day or so, and some at 6.6% which I might bring down to 6.5% if it's still there in a few days. My personal average, from the last year, is currently 6.4%. There is less than £90k on offer at 6.3% and below, and £70k of unmet demand at 6.1%. Under those conditions, 6.4% will be hit later today, almost certainly. The 5.1% WA figure is, as I said, the average of the five corporates currently sitting on the invest tab. And the WA figure - offer apart - has to have 1% taken off for fees - 4.1%. There is no equivalent fee on RS. Take the headline figure from RS - 6.1% and the best available on WA - 6.0% with 0% offer - and they almost match, sure. But that's zero diversification and a short-lived offer on the fees. And if that's not cherry-picking to suit your argument, I don't know what is... But anyway. Enough from me on this. At the moment, I'm out, but I will keep an eye on it in case it gets more interesting.
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Post by msa on Apr 30, 2016 20:09:19 GMT
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Post by msa on May 12, 2016 11:12:38 GMT
now in overfunding at 150%
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Post by msa on May 16, 2016 14:03:21 GMT
It seems they are also gaining traction on the number of loans they are offering: one loan ready to invest, another one overfunded and they have brought on three new names. www.wisealpha.com/invest/
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am
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Post by am on May 16, 2016 15:14:25 GMT
Hargreaves Lansdown have expressed an intention to enter the P2P space. One sector which it strikes me that they could readily enter is the mini-bond market.
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ben
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Post by ben on Jul 2, 2016 20:14:00 GMT
Has anybody actually used this site?
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