Might be worth noting that the SM rates often drop when there is a new loan on AB as people sell loans to partake in the new loan, so there is an opportunity to diversify across the platform, often at par, which is useful if you missed out on previous loans or if you are just starting to build a portfolio on AB
With the SS going down hill with rates and overdue loans, might be worth looking at AB if you haven't already
Quite right Stevio. I have done some of that selling. With no fees and instant returns there is no reason not to diversify into a new good loan. (OK it may fail to fill but I will take that small chance).
Thank you for that reply, Ablrate. Many platforms have small bugs to fix, FC hatched a new one yesterday.
I am a seller on the SM rather than a buyer, but I think that if you do not have the cash to pay on the due date, then to be fair, trading should be suspended. If you cannot press the button through being obliged to attend another Buckingham Palace Garden Party, etc, then that is different.
Do they go after the A & A+ loans a little more diligently than the D's and E's, do you reckon?
I would not know. I think they chase hard the ones where they think they can get hold of substantial recoveries, and those where the borrower is suspected of being a bad dude. They expect more E failures than A+, but I think any difference on chasing by band is probably influenced by the overall loss rate of that band compared with target. They no longer report by band on the statistics page, and so a veil has been drawn over that - particularly any possible large A+ or A property default which might occur (maybe the one which is currently £1.6M later than 300 days). We're going to need a bigger fan, as the saying goes, sorry no image!
I wouldn't have thought it'd matter too much whether the movie's a blockbuster or not, I think what's more significant is the fact that they'll be leased to a blue chip company, so payments from them should be assured. I've had no prior involvement with C**f** so don't know about their history, but I'd presume the majority of the risk on this one would lie there..?
Glad to hear that our security is not dependent on the blockbusterability of the movie. Shall await the details. Personally I have felt confident in the c***f*** setup, but have been tempted to sell my holdings on the SM - not recently Elliotm.
Update the admin section. This one is late, we have contacted and they say it will be with us today.
Thanks Ablrate, though I did not choose this one. But for interest, how does the suspension of trading happen when a payment is not on schedule? Elsewhere I am used to a complete suspension if cash is not with lenders accounts on the due date, for whatever reason. Maybe this is too cautious, maybe not.
At present loan 21 payment is overdue, only a day. New bids and offers cannot be made because it is amortising. Existing bids and offers are there and live, and I believe I could buy some at 103.930% if I were daft enough. Earlier I might just think the button had not been pressed.
But if it were not amortising, and if I knew the payment was delayed, could I sell out at 99%? When do you trigger suspension under 7.1.i? It seems arbitrary. So anyone buying on the SM (suppose more of the same loan without DD) should they check the current payment status first?
I think if I bought some 21 now, and things did not go well (I am sure they will but hypothetically) I would not be best pleased with Ablrate. Personally I would go for safety in suspending.
The interesting question is, how are they going to raise £3m this way?
The repayments of the earlier loans being refinanced will free up funds and unlink those lenders. Will be interesting to see how it goes. They are being more diligent on Q&A for this one, they know that helps.
It will be interesting. There was 2% cash back on all seven loans before, A+ at 8%. They need an extra £400k+ as a 10% A. Autobid is not going to do that. Lenders make fresh decisions when they get their money returned. I imagine FC would have liked to refinance as an A+ to help it along. Just wondering if the later tranches may be more fruitful.
The interesting question is, how are they going to raise £3m this way? Not sure the trust is going to take many tranches, none of the four (two in error) have gone that way. Only two options I know of.
I think the 12 months is a safe number - taking no chances of another late saga.
The Funding Circle SM works pretty well, down to £20 loan parts at the start of a five year amortising loan. The resolution on the FC SM is 0.1%, which is two orders of magnitude more coarse than Ablrate's 0.001%. If trading is stopped in the last month, then I would have thought that 0.01% would be sufficient resolution, assuming you cannot trade principal less that £1. (If I tried to do the sums I would get them wrong).
Note: FC's monthly repayment is not calculated at the time, but is a lifetime schedule for each loan part, with the scheduled monthly interest payment divided in whole pence when a sale takes place. I suppose that makes things simpler - but the AER equivalent, the buyer rate, works well enough with 0.1% resolution - significant change yes. I am saying that 0.01% might be right for Ablrate, not 0.1%.
As the forumite who introduce the market haggling sketch from the Life of Brian, I have to add the fact that Brian was in an extreme hurry to buy the beard disguise because he was being sought by Roman guards, and was inexperienced in trading in that market. The FCA might have thought he needed protection, and I think that with more time and experience Brian might have welcomed the opportunity to bid in parts of a shekel. From my own experience of the Ablrate SM, I personally would prefer to take out the third decimal place, and require bids to be altered by at least 0.01%. The current resolution of one thousandth of one percent is not needed and harder to read. It's a penny in a thousand pounds of principal (or 1 3/4 grains in a thousand shekels).
I notice 32482 A is £4540 more than 32365 A+. I wonder, does that mean the borrower is paying the cost of this debacle?! The total estimated funding requirement £3,015,314 (incl. interest & fees) in the Key Loan Features of the Investors Report didn't change.
Dear Funding Circle Borrower,
About that loan contract 32365, which you have just entered into with Funding Circle lenders as the first part of your refinance. Unfortunately we find we have made a mistake in your banding and have told the borrowers that you are A+ when we should have changed it to A. This does not alter the numbers in the contract, but it has been offered to the lenders with a better risk than it should have been. Therefore you have to repay it - which we will do for you - and we will start again with a new loan at A risk band, to replace and repay 32365. We apologise for this error and will sort it all out for you quickly, though, technically, you must agree to repay 32365.
Oh, by the way, because we did not spot our technical error in time and allowed the loan to draw down, there will be a extra cost to repay of approx. £4,000 in interest and servicing fees. OK if we add that to your loan?
[To be fair I do not believe that FC would even contemplate the above. Probably they have adjusted the size of the replacement tranche to fully repay 32365, including the interest and servicing fee that the system demands for early repayment. They will just reduce subsequent tranche(s) and the extra cost will come from off their arrangement fee (which is part of the borrowed amount).]