shimself
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Post by shimself on Sept 24, 2016 8:44:54 GMT
Just to be clear, and to add to the two above posts, if interest rates go up enough and you need to sell, there probably won't be anyone who wants to buy and you'll be stuck with it until maturity. Hint: you can sometimes find out where the city think rates will be in the future by looking at building society 1-year, 3-Year and 5-Year fixed deposit accounts. 5-year best rate 2.01% according to moneyfacts. I have already invested in wisealpha's Virgin bond which is LIBOR+
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Post by Wisealpha on Sept 24, 2016 10:08:35 GMT
Hi Paul,
The sales fee is paid on any sale prior to maturity (we don't charge you a Sale fee if you hold the bond to maturity). The internal mechanism for a sale is always that we purchase and then sell to another lender on the site. So it doesn't matter if we buy it for our own book or if we buy it to sell on immediately the 0.25% is still charged.
Right now we have a simple secondary market that we are using with some anchor lenders who are helping us to buy more bonds. We will release that for everyone shortly. We can also help investors sell if they need and ask us but that is at our discretion. This version of the secondary market just has one fixed price (the price we buy at is the price people sell at) and everything is done in a queue.
Once we get more loans and bonds and users on the site (sometime between now and early next year) we will beta test the more sophisticated secondary market (with our members) where individuals can enter their own buy and sell price - but we'll design it in a way to keep the bid (buy) offer (sell) prices around the fair offer market price. The aim is to create a platform where regular investors and more sophisticated members can invest in a neatly, fairly designed eco-system and get access to investments that are currently controlled by the financial elite. Because we are building a community of investors the way the site operates and adapts going forward will be by taking our members views on board so that we can improve it.
Our aim is to eventually create a fairly liquid market with tight buy (bid) and sell (offer) spreads.
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Post by Wisealpha on Sept 24, 2016 10:17:28 GMT
Whilst I'm no expert in bonds... there are a few around here and their input would be greatly appreciated... I would assume that the normal issues could apply here, e.g if none inflation link and inflation rises then you can be stuck with money rotting away. Hi Jonah, We will be adding more loans (which have floating rate coupons i.e L+fixed margin) as soon as we feel rates may start to gradually creep up (as Paul has said 5 year savings rates of around 2% are a rough indicator of how long the market is baking in). Libor the floating rate component of the interest coupon on loans tends to follow the BoE central rates, which in turn are set based upon an inflation targeting strategy by the BoE (although these days the BoE strategy takes into account things like Brexit and growth more often than just purely inflation targeting). The point is that we will aim to offer people a good choice of 'floating rate' and 'fixed interest' rate investments going forward so people can decide how they want to invest. The other point to note is that most P2P sites are fixed rate and if you've got money sitting in a low yielding savings account that is where your inflation rot is really likely to be.
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jonah
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Post by jonah on Sept 24, 2016 11:35:56 GMT
That comment wasn't intended as a criticism Wisealpha, merely a comment on the product in general. Thinking more on this concept, this isn't 'true' p2p.... this is more allowing mere retail people with their smaller pockets into the areas normally reserved for people with larger cash quantities. Would you see your self as more similar to ORB than to the other p2p sites which inhabit this board?
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rick24
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Post by rick24 on Sept 24, 2016 11:47:48 GMT
@wisealpha
You give yourself pretty sweeping powers to amend the agreement, viz.
"This Agreement may be amended:
16.1.1 unilaterally by agreement between the Note Issuer, wiseAlpha Technologies and each such other wiseAlpha Product Issuer as may have acceded to this Agreement by giving you not less than ten business days’ written notice; and/or
16.1.2 by giving you written notice with immediate effect if such amendment is necessary in order to comply with the FCA Rules and/or any other applicable legal or regulatory obligations, and you shall be bound thereby.
An up-to-date version of this Agreement will always be available on the Platform and your consent to any amendments to this Agreement will be deemed to be given by your continued use of the Platform."
I understand why you might want to change the agreement (e.g. regulatory compliance), but it is not clear how the user can withdraw their consent and terminate the agreement (quickly and conveniently and at the latest before changes come into effect) if he or she objects to changes.
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Post by Wisealpha on Sept 24, 2016 11:59:18 GMT
That comment wasn't intended as a criticism Wisealpha , merely a comment on the product in general. Thinking more on this concept, this isn't 'true' p2p.... this is more allowing mere retail people with their smaller pockets into the areas normally reserved for people with larger cash quantities. Would you see your self as more similar to ORB than to the other p2p sites which inhabit this board? Hi Jonah, Sure, I didn't take it as such. I would describe us as a marketplace lending business and we are clear on our site we aren't P2P because we don't originate any of the loans and bonds (yet..). Sure, you could compare us to ORB (although remember we are not an exchange) but we also select what goes on the site (rather than it being just a broad brush any issuance platform) and we focus on larger more established borrowers. We also have listed and unlisted debt investments as well and the philosophy of wiseAlpha is really to put interesting investments on for people and liberalise different segments of the corporate debt markets for as many types of investor to access. We've been compared to an upmarket version of Funding Circle but really our focus is on the lenders/investors rather than focusing on the business and so I would say we are an investor focused marketplace lending platform.
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Post by Wisealpha on Sept 24, 2016 12:08:38 GMT
@wisealpha You give yourself pretty sweeping powers to amend the agreement, viz. "This Agreement may be amended: 16.1.1 unilaterally by agreement between the Note Issuer, wiseAlpha Technologies and each such other wiseAlpha Product Issuer as may have acceded to this Agreement by giving you not less than ten business days’ written notice; and/or 16.1.2 by giving you written notice with immediate effect if such amendment is necessary in order to comply with the FCA Rules and/or any other applicable legal or regulatory obligations, and you shall be bound thereby. An up-to-date version of this Agreement will always be available on the Platform and your consent to any amendments to this Agreement will be deemed to be given by your continued use of the Platform." I understand why you might want to change the agreement (e.g. regulatory compliance), but it is not clear how the user can withdraw their consent and terminate the agreement (quickly and conveniently and at the latest before changes come into effect) if he or she objects to changes. Hi Rick, The flexibility we have in there is really to help us adapt to an evolving regulatory and marketplace landscape and the fact this is a platform with a whole host of smaller users rather than just a few big investors. If we need to make a change it wouldn't be practical to ask consent from all platform investors when they would in all likelihood be very minor to improve the efficiency of the platform. I would think most of the top platforms have similar wording in their investor agreements. If we needed to amend the agreements we would explain why with a notification and obviously if people object they can tell us and decide to stop using the platform. Obviously it's not in our interest to alienate investors or obviate our responsibilities by trying to make controversial changes as this would affect our business. Right now I can't see any reason why we would change the agreements in the future. Kind regards,
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jonah
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Post by jonah on Sept 24, 2016 12:09:13 GMT
I suspect I need to register / look around a little more. As I understand that there is some form of referral bonus, does anyone want to PM me a link or similar?
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Post by Wisealpha on Sept 24, 2016 17:18:16 GMT
Hi Samford,
The key FAQs here (https://www.wisealpha.com/how-it-works/key-things-know) provide an overview for investors.
1) We aim to mitigate the credit risk of our Note Issuing SPV by having a$45bn independent global fund administrator overseeing all of the loan and bond assets that back each Note. These assets are held separate from the main operating entity (WiseAlpha Technologies) running the platform. In the event that our platform had issues investors would just receive a notice from the administrator asking investors in the investors in our Notes to vote on either selling the loan and bond assets or to continue receiving the interest and capital repayments into their bank accounts. It's similar to the winding up process of a fund except investors in each individual Note that is backed by a particular loan or bond receive the economics (i.e interest and capital) due on that particular loan or bond.
2) Bonds tend to have call (i.e. repayment features). Call Protection limits the bond issuing company from repaying or ‘calling’ the bond for a period of time. Once the period of call protection ends the bond issuing company can repay the bond based on a schedule of Call Prices (at a premium to par) at set dates. So lets use the example of Premier Foods (https://www.wisealpha.com/loan/detail/19/pfss) - the current price is 102.5 and the next call price (or repayment price) is 103.25 at March 2017 which you can see under the heading Next Call. Popular bonds can trade at a price above the next call (repayment) price but not usually that much given the prepayment risk. If you invest in a bond whose price is below par (100) you then make a capital gain if the bond is repaid at par or at a price above par if applicable.
P2P loans don't tend to have call or early prepayment protection from what you say and that's my understanding too.
3) The swap curve is what we use to calculate estimated forward expectations of Libor and hence YTM for loans. Having said that as you say rightly that is an average of what people expect and so actual rates could be higher or lower 5 years from now. This is partly why we have over-weighted fixed rate bonds on our platform right now and with a mix of maturities 2-7 years. We will add more floating rate loans if we see the fixed component being attractive for the risk or if we feel rates will start to rise higher than what the swap curve is currently baking in
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shimself
Member of DD Central
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Post by shimself on Oct 2, 2016 21:12:45 GMT
With regard to interest rate risk, 3m libor is 0.38%. From the swap curve, 3m libor, 5years forward is 0.73%. So the market is basically saying unchanged policy for next 5 years. A better interpretation, however, would be the market sees an equal probability between rates being higher and lower in 5 years than now. Remember zero is not a floor anymore ... The only Libor + loan on the platform, the Virgin one, does actually have a floor above zero
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Post by Wisealpha on Oct 4, 2016 15:31:53 GMT
Grab a slice of Pizza Express!
We've added a new investment this week to the wiseAlpha market, this time from Pizza Express, the UK's leading Pizza restaurant chain and maker of the famed 'Sloppy Giuseppe'!
Check out the details here:
Pizza Express 6.625% Senior Secured bonds maturing August 2021
• Price 98.6, YTM 7.0% • No.1 UK casual dining restaurant operator with £488m in revenue and £100m in EBITDA.
• Founded in 1965 and operates from 447 locations in the UK, 14 in Ireland and 92 Internationally.
• Expanding in China, recently acquired Firezza and now launching delivery partnership with Deliveroo.
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Post by msa on Oct 24, 2016 13:10:46 GMT
Grab a slice of Pizza Express! We've added a new investment this week to the wiseAlpha market, this time from Pizza Express, the UK's leading Pizza restaurant chain and maker of the famed 'Sloppy Giuseppe'! Check out the details here: Pizza Express 6.625% Senior Secured bonds maturing August 2021
• Price 98.6, YTM 7.0% • No.1 UK casual dining restaurant operator with £488m in revenue and £100m in EBITDA. • Founded in 1965 and operates from 447 locations in the UK, 14 in Ireland and 92 Internationally. • Expanding in China, recently acquired Firezza and now launching delivery partnership with Deliveroo. Any chance of adding more of that bond as it has almost "sold out"?
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Post by Wisealpha on Oct 24, 2016 13:23:43 GMT
Hi Msa,
We've managed to make available another £10,000 but we'll go out and buy another chunk soon. We try to keep some availability on all the names we list but occasionally if we do sell out it won't be for long. We'll be adding some Virgin Media bonds shortly as well since we've sold out of the loan and no one wants to sell.
Kind regards,
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james
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Post by james on Oct 26, 2016 11:14:06 GMT
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Post by Wisealpha on Oct 26, 2016 12:50:55 GMT
Hi James, Yes, that's the correct underlying security. Hony is a Chinese private equity firm, they don't need to be regulated in the UK to purchase UK companies. The bonds themselves are listed so the company is required to follow market standard disclosure and accounting rules. It is quite common for bonds like these to be issued to fund part of the purchase of the entire company. Hony invested around £314m in the equity in the deal (you can see the capital structure here on our site: www.wisealpha.com/loan/detail/21/pzzexpSenior secured debt (bonds and loans) have security granted over substantially all of the assets of the company including a pledge over the shares. Pizza Express Senior Secured bonds follow that same market standard. Effectively, that means if the company fails to pay back the bonds or pay its interest investors could theoretically enforce their security and take ownership of the company and its assets. Obviously, it's not that common for things to get to that point but that's the control senior secured gives lenders. Therefore, it's junior lenders and the equity owners who are most at risk - think of senior secured lenders as first class passengers in a plane with the equity holders sitting back in economy. Senior secured lenders have a more comfortable ride but have their returns capped (i.e the annual interest coupon). Equity holders have a bumpy ride sitting at the back but more upside if the business does well and grows quickly. Kind regards,
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