shimself
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Post by shimself on Nov 19, 2016 15:17:58 GMT
Bonds-what can go wrong:
The company can go bust and not be able to pay; in the case of these rather upmarket bonds they would have to go very bust as we have more or less first call on the assets
If general interest rates go up to say 10%, then the bond looks rather sick at say 6%, so if you needed to sell it you would have to discount the price a lot (basically so the purchaser is getting 10%+). But if you keep it that's not a problem as such. That argument applies to loans of any sort of several years duration, if someone new can lend money in the year 2020 at a higher rate than your loan is earning you won't be able to flog the old loan unless you give a big discount.
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jaswells
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Post by jaswells on Nov 19, 2016 22:52:47 GMT
With these relatively safe bonds your real returns will only be negative if inflation goes above 5-6% for an extended period of time (as long as you hold to maturity)
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Post by Wisealpha on Nov 29, 2016 12:24:16 GMT
Ok thanks, so the price of the bonds today will usually be lesser or greater than when issued. To take the example of the highest priced bond currently offered, if I wanted to buy £100 worth of a Bakk***r bond today, it would cost £107, so I am effectively paying a premium that will reduce my Yield to Maturity from 8.75% to 6.6%, is that correct? So it is much the same as buying a loan-part at a premium at Funding Circle say, yes? If I kept the bond note for a year, and then managed to sell it at the same price - with a 7% premium - then my annual yield figure, my return, would be 8.3%, is that correct? Or maybe that is not correct. If I later sell my bond note at par, will the buyer be paying the same price as I paid? That is, does the WiseApha secondary market effectively become a market that is quite independant of the outside market? Meanwhile, the general market price could increase or decrease. Would a buyer of my bond note in one year's time have access to that market price? i.e. would the current open-market price be listed alongside my offer to sell? Would it be relevant? Seperate question: Does it take an expert to forecast whether the price of such bonds are likely to vary much over the next year? Do traders gamble on such changes? And finally: What annual percentage will Bakk***r actually be paying for their loan? Apologies if I am confusing things even more... Hi kaya, yes so Bakks you are paying a premium (the company is growing strongly and so people like it) and the higher price reduces your overall return to maturity. If the price is the same in one year then that would be correct. The wiseAlpha secondary market when it is fully operating would tend to have a price similar to the main market but it depends what users on the site want to buy and sell at. The way we would do it is we would put our own bid in (which would reflect market prices) as a guide stick but ultimately if you are selling you determine the price you would want to sell at. All the companies pay the coupon rate indicated on our market page - that doesn't change. It's just the price you pay that effects what you ultimately make when the bond is paid back.
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kaya
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Post by kaya on Dec 7, 2016 12:01:48 GMT
wiseAlpha, a few questions if I may.
How is the new investor uptake going? Are you meeting targets? How many 'retail' investors do you now have, and what is the end-target? My impression is that current uptake is pretty slow, with availability not changing much.
Diversity may be a problem at the moment, with just 10 bonds to choose from. How many concurrent bonds to you hope to offer (a) a year from now and (b) fully up and running. i.e. what are your targets?
Re the Virgin Media Loan, what is different to this 'loan', as opposed to a 'bond', and what does the '+3.5%' mean?
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Post by Wisealpha on Dec 7, 2016 23:26:58 GMT
Hi Kaya,
We're steadily growing, we have around 899 registered members and about 350 active users at present. We're being prudent in gradually building rather than spending a huge amount on marketing until some of the partnerships with banks and IFAs we are talking to come through and obviously we'd love our early adopters to spread the word because we think our platform is focused on one of the best lending niches and could potentially be the home for most retail lenders in the future who want to avoid the hassle of regular defaults when the credit cycle turns. We're committed to building the market for retail investors over the long-term.
Over time we'd like to have around 20-30 investments to choose from at any one time (remember we select from rather than list the entire market), although we may end up with more over time as we source other private debt opportunities and add other types of investments not easily available.
From a diversity standpoint it's worth remembering that the universe of very large corporates is smaller than the small business end of the market but also large businesses with secured debt tend to fail much less often than unsecured small business loans and transparency is much higher - i.e. large businesses tend to have a lot of information about them and so it's completely different from investing in opaque loans to various small entities especially when the economy weakens.
Virgin media has both loans and bonds (the difference between a loan and bond is really just a slightly different format although credit risk is pretty similar given they are both senior secured. So for example loans tend to be floating rate (with Libor being part of the coupon component while bonds tend to be fixed rate. Documentation is also different and so loans tend to be syndicated to bank type lenders while bonds are tailored to the vagaries of the institutional investor/private investor market).
Kind regards,
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shimself
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Post by shimself on Dec 8, 2016 13:06:31 GMT
Re the Virgin Media Loan, what is different to this 'loan', as opposed to a 'bond', and what does the '+3.5%' mean? L+3.5% means LIBOR+3.5% (interbank lending rate currently 0.38%) so 3.88% total. The good news being if interest rates go up then the rate earned on this will go up as well.
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kaya
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Post by kaya on Dec 8, 2016 15:21:29 GMT
obviously we'd love our early adopters to spread the word because we think our platform is focused on one of the best lending niches and could potentially be the home for most retail lenders in the future who want to avoid the hassle of regular defaults when the credit cycle turns. Ok, I'll give you a plug to fellow forumites! If you invest £1000+ by year's end, you get these investments fee-free for the life of the loan. To get this you need to be referred. Feel free to PM me if you need a referral. (the referrer gets a bung only after 3 qualifying referrals).
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Post by msa on Feb 12, 2017 10:35:36 GMT
I received an email from wiseAlpha. They seem to have launched a new product: 1 year wiseAlpha Investment bond paying 8.00%: Link
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ben
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Post by ben on Feb 21, 2017 17:31:09 GMT
Been extended again the bond for the second time.
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Post by caveman38 on Feb 21, 2017 19:14:08 GMT
This and possibly another of these Investment Bonds 1yr. 8% till they introduce similar 1/3/5 yr. starting at 5%. So limited opportunity at these good rates. More company £100,000 tranches to be released soon eg. Pizza Express and others.
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ben
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Post by ben on Feb 21, 2017 19:37:25 GMT
Had a little nibble of the pie but not to much, as have quite a bit invested in some of the other ones already.
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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 Feb 21, 2017 19:47:24 GMT
Had a little nibble of the pie but not to much, as have quite a bit invested in some of the other ones already. Nibbling pies (or great big bites) can get you into trouble you know
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Post by msa on Feb 24, 2017 9:09:31 GMT
I received an email from wiseAlpha. They seem to have launched a new product: 1 year wiseAlpha Investment bond paying 8.00%: LinkJust received an email from wiseAlpha saying: "WiseAlpha 8% Investment Bond – closing today!
We will take final requests today in the event that the remaining amount of the bond on the market is sold out.
We anticipate the wider bond programme to start in a few months following this introductory offer. ..."
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puddleduck
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Post by puddleduck on Feb 9, 2018 13:43:56 GMT
I received an email from wiseAlpha. They seem to have launched a new product: 1 year wiseAlpha Investment bond paying 8.00%: LinkMine has repaid today. Very glad I took a punt on this, seemed a bit too good to be true at the time!
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jaswells
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Post by jaswells on Feb 9, 2018 22:02:44 GMT
Yep, just checked my account 8% return on a 5 figure sum and an additional 0.25% interest as a thank you bonus. I also believe this has been repaid a couple of days early. If only I was having such a seamless experience with my numerous p2p sites. Nice on Wisealpha, keep it up!
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