Across a number of threads clients have enquired about likely losses, and in particular the expectation that a loan in default will give rise to a loss.
The loss given default ratio for BondMason is currently running at 1.3%
This is the expected loss on average for a loan, which has gone into default. For example, if you have a £100 loan position which has gone into default on BondMason, then on average, you will suffer a £1.30 loss.
Given this thread relates to losses, I though I'd share some detailed up-to-date statistics:
Total losses since inception: £56,968 (since Oct 2016)
Total amount invested: £35M Losses as a percentage of total amount investment: 16bps. (0.16%)
Total interest paid: £1.14M Losses as a percentage of interest paid: 5%
NB: Average term of loan: 5 months. (which is why £1.14M / £35M = 3.3%; not 8%)
Annual expected loss as a percentage of invested capital: 38 bps Annual expected loss as a percentage of interest earned: 4.75%
Proportion of loans going into default / watchlist: 12% The loss given default ratio for BondMason is currently running at 1.3%
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For example, if you have a £100 loan position which has gone into default on BondMason, then on average, you will suffer a £1.30 loss. I hope that Steve's optimism for recovery of current positions is well-founded. I have been 'Mr Unlucky' in my own BM experience. I have just achieved 'cash out exceeds cash in' but unless a high proportion of currently unsaleable positions is recovered, I might as well have kept the money on deposit. We are always told to keep a long view, so here is my experience:
Started with BM May 2016; ramped up to £24.5K invested by January 2017.
Hit by six defaulting (mainly invoice trading) positions, which yielded, respectively: two total (100%) losses (write-offs); and four write-offs ranging from 57% to 90% of capital. Oh, and by the way I was always at 1% limit per position.
Written off sum from these losses £526 (cf. gross return £2048 before fees of £300). On the invoice trading side alone it turns out that I did better on my own behalf at a larger scale with Market Invoice over a preceding 18-month period (though nowhere near well enough to want to continue or justify the risks of invoice discounting)!
Went into drawdown mode with BM May 2017 due to the losses caused by the unsuccessful foray into invoice trading; closed account February 18, except for remaining unsellable positions. Some has trickled back since then but currently have over £1200 waiting on hopeful recovery, which will represent all but about £100 of positive out-turn from my BM experience.
If I just suffer something not much worse than the average loss of £1.30 per £100 on these remaining property-related positions over the next year or so I will walk away reasonably content.