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Post by wiseclerk on Apr 19, 2016 8:46:20 GMT
Currently there are 2 invoices in financing on Investly's invoice discounting.
I see it as an interesting didactic play in lender rationale.
The smaller invoice is rated by Investly as B / BB.
Bidding drives down interest rate to currently just below 10%
The larger invoice is rated by Investly as AA / AA
Interest rate is currently 18%, as not 100% filled yet, but bidding will continue for 3 days.
If investors would make rationale decisions I would expect the interest rate of the larger invoice well below the interest rate of the smaller invoice as the better rating indicates a much lower default risk. (without debating how accurate and reliable the ratings at Investly are - the platform is very young - but it is one of the few informations investors have to gauge default risk)
At the moment it looks unlikely that the bigger invoice will close at lower interest than the smaller one.
Do I miss anything that accounts for this type of bidding behaviour by investors? Do you think the interest rate will sink below 10% on the larger invoice too (i very much doubt it).
P.S.: The invoices opened at roughly the same time. At that time interest rate was 21% on the smaller invoice and 18% on the larger.
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Post by gmaxkenny on Apr 19, 2016 11:06:28 GMT
It is now at an amazing 8% which almost defies belief. The main problem seems to be that a lot of bidders are bidding in round figures instead of reducing their bids by .1% which means that the interest rate drops very quickly. Maybe when auto invest is introduced with a facility to reduce bids by .1% until you reach your bottom line bid this will improve things other wise I find it very difficult to invest on this platform. Difficult platform = invest elsewhere.
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Post by kristjan on Apr 19, 2016 12:50:06 GMT
If investors would make rationale decisions I would expect the interest rate of the larger invoice well below the interest rate of the smaller invoice as the better rating indicates a much lower default risk. (without debating how accurate and reliable the ratings at Investly are - the platform is very young - but it is one of the few informations investors have to gauge default risk) The credit ratings that we assign are based on Krediidiinfo (formerly part of Experian, but they were just bought out by CreditInfo). In some cases, we update the credit rating with non-public information. However, by and large, it is still the credit rating agency that gives the rating. URL: www.krediidiinfo.ee/index.php?m=66&lang=II'm fairly certain that behavior can be explained by small investors (if you look at the size of the bids).
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Post by kristjan on Apr 19, 2016 12:52:28 GMT
It is now at an amazing 8% which almost defies belief. The main problem seems to be that a lot of bidders are bidding in round figures instead of reducing their bids by .1% which means that the interest rate drops very quickly. Maybe when auto invest is introduced with a facility to reduce bids by .1% until you reach your bottom line bid this will improve things other wise I find it very difficult to invest on this platform. Difficult platform = invest elsewhere. The final version of the autobidder will have that functionality. Currently we are working on a Beta version just to get things off the ground. We are also working on changes to the website, so the final autobidder will be rolled out with the new website. On larger auctions you do see a bit more granularity in bids, probably because there are more seasoned investors taking part in these (with larger bids as well).
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Post by wiseclerk on Apr 19, 2016 13:23:59 GMT
It is now at an amazing 8% which almost defies belief. ... I guess it would go even lower, were it not for the imposed minimum bid rate of 8%.
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p2pmaster
investment is life.
Posts: 128 
Likes: 54
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Post by p2pmaster on Apr 19, 2016 14:50:11 GMT
Investors are reducing their cash drag at the platform. As the number of offerings are still relatively low at the platform, investors are seeking to dip their money into every invoice to increase diversification among different sectors and borrowers.
One could try to gauge irrationallity or risk-seeking profile of investors at Mintos, which provides an opportunity to select from many different invoices from two different originators.
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Post by wiseclerk on Apr 21, 2016 9:43:18 GMT
The larger invoice will be cutting it close. 50 minutes left to go and 1440 Euro open. If it fills, I am almost certain it will close at the max. interest rate - 18%.
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Post by gmaxkenny on Apr 21, 2016 16:34:04 GMT
Auction ended at 18% a few minutes ago. I bet those who bid 8% on the previous one are feeling a bit silly right now.
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p2pmaster
investment is life.
Posts: 128
Likes: 54
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Post by p2pmaster on Apr 21, 2016 19:49:20 GMT
Nice auction, nice job, Investly! We are waiting for more invoices!
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Post by captainconfident on Apr 21, 2016 20:26:16 GMT
I'm one of those referred to above who bunged all their residual uninvested cash into the big one. It's not difficult to invest on Investly. Nobody with any sense has moved large amounts of money onto this platform. It's a small but slowly growing vehicle and its currently ideal for those who want mitigate a bit of platform risk. The busier this site gets, the more small amounts I'm flicking on to it. Going well so far.
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Post by kristjan on Apr 22, 2016 5:42:40 GMT
p2pmaster: Thank you! We are working on signing up more companies and bringing you more invoices.
captainconfident: A lot of investors are using the same strategy. In fact, this has been observed on US platforms as well - it is not the number of investors that increases as much as the amount per investor.
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