On the other hand such pricing combined with a buyback guarantee from the originator makes such investment essentially a loan directly to the company, since the investor takes the risk not of the underlying but of the originator
In this perspective such a rate of return seems inadequate for such an investment.
Investment opportunities with a buyback option from loan originators facilitated on Mintos and Twino marketplaces are essentially balance sheet loans to these alternative lenders packaged in the form of peer-to-peer consumer lending. Given the size of companies and little information on the originators these investment opportunities don’t seem to provide investors with sufficient return to compensate for the risk being taken. Nevertheless unsophisticated investors take these risks given the long-lasting period of near-zero rates of return for their investments.
Sure, my post was just a general statement. Last time I checked viasms group the bonds and the buyback loans yielded similarly. If investing in the BB loans I would expect some little less yield, due to the circumstances.
The main issue with Buybacks and personal loans stay the same no matter what - everything is ok as the wheel keeps spinning and music keeps playing. If its 2008-2009 again, than the music stop and those personal loans will default close to 100% (lets be honest here, most of those unsecured personal loans are to people who can barely manage their finances right now, if they loose their job, they have barely anything left to survive) which will mean the company won't be able to provide buybacks.
Usually, bonds duration is much longer (3-5 years) than individual personal loans with BB (30 days to 24 months). Hence, we can exit BB loans faster than bondholders and for that possibility I am okay with lower yield.