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Post by Harland Kearney on Nov 27, 2020 14:06:34 GMT
I have a question, I have read the risk notice and the in-depth terms.
Under the default bands, if a loan reached the default (suspended) band would the money tied up in that loan from investors become frozen, or would the platform still operate as a black box account style account? Allowing investors to still sell these loan parts & withdraw capital in full if the platform could allow it. (Under normal circumstances)
It is a important distinction for obvious reasons if one were using the access product. If money did become partially tied up, representive of the loans exposure to the broad portfolio it could present issues. Obviously manage your risk is the first step yourself.
Thanks!
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Post by Ace on Nov 27, 2020 14:29:28 GMT
I have a question, I have read the risk notice and the in-depth terms. Under the default bands, if a loan reached the default (suspended) band would the money tied up in that loan from investors become frozen, or would the platform still operate as a black box account style account? Allowing investors to still sell these loan parts & withdraw capital in full if the platform could allow it. (Under normal circumstances)It is a important distinction for obvious reasons if one were using the access product. If money did become partially tied up, representive of the loans exposure to the broad portfolio it could present issues. Obviously manage your risk is the first step yourself. Thanks! My understanding is that the loan would be removed from the platform's daily reassignment algorithm and the lenders would stuck with their share of the defaulted loan unless it became performing again. I haven't seen any loan reach this stage yet. There is one that is defaulted (non-suspended) as it is still expected to repay all capital and interest. A defaulted(suspended) loan wouldn't prevent you from accessing your funds in performing loans. This policy seems fair and reasonable to me.
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Post by Harland Kearney on Nov 27, 2020 18:38:24 GMT
I thought that was the case, it appears they only move into suspension when they deem a possible capital loss may take place. I suspect this would have to very special circumstances as we only hold senior tranches and quite well protected from even a drop in the valuators LTV on a sale. (Something most other P2P platforms don't appear to have a luxary off, and always seems to be the coup de grace on a number of Oppsie loans, AC s 227 is a great example of that type of can kicking)
I guess if one kept good eyes on the loan updates, one could use the access accounts to hedge cash to protect from inflation when all other avenues are exhausted, (in a sense of breaking even, 1/3 acesss, 2/3 cash savings) to reach that mighty 2% PA.
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Post by Ace on Nov 27, 2020 18:58:00 GMT
I thought that was the case, it appears they only move into suspension when they deem a possible capital loss may take place. I suspect this would have to very special circumstances as we only hold senior tranches and quite well protected from even a drop in the valuators LTV on a sale. ( Something most other P2P platforms don't appear to have a luxary off, and always seems to be the coup de grace on a number of Oppsie loans, AC s 227 is a great example of that type of can kicking) I guess if one kept good eyes on the loan updates, one could use the access accounts to hedge cash to protect from inflation when all other avenues are exhausted, (in a sense of breaking even, 1/3 acesss, 2/3 cash savings) to reach that mighty 2% PA. Yes, assuming you're using "access" to refer to Loanpad's Classic account. I'm a bit more bullish (perhaps foolhardy) than that. I've moved most of the funds that were in FSCS protected accounts into Loanpad (obviously not my emergency funds, I'm not quite that foolhardy). I keep a small amount in Classic (~10% of my Loanpad balance), and the rest in Premium. I then use the rolling withdrawl technique to ensure that I have weekly access to an extra ~10% of my total Loanpad balance while earning the higher rate. Its worked very well for me so far. I figure that if there ever was a run on Loanpad, most funds would be sitting in Premium and my funds would be well placed in the exit queue. I should add that I'm certainly not expecting a run here.
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Post by Harland Kearney on Nov 27, 2020 19:06:20 GMT
I thought that was the case, it appears they only move into suspension when they deem a possible capital loss may take place. I suspect this would have to very special circumstances as we only hold senior tranches and quite well protected from even a drop in the valuators LTV on a sale. ( Something most other P2P platforms don't appear to have a luxary off, and always seems to be the coup de grace on a number of Oppsie loans, AC s 227 is a great example of that type of can kicking) I guess if one kept good eyes on the loan updates, one could use the access accounts to hedge cash to protect from inflation when all other avenues are exhausted, (in a sense of breaking even, 1/3 acesss, 2/3 cash savings) to reach that mighty 2% PA. Yes, assuming you're using "access" to refer to Loanpad's Classic account. I'm a bit more bullish (perhaps foolhardy) than that. I've moved most of the funds that were in FSCS protected accounts into Loanpad (obviously not my emergency funds, I'm not quite that foolhardy). I keep a small amount in Classic (~10% of my Loanpad balance), and the rest in Premium. I then use the rolling withdrawl technique to ensure that I have weekly access to an extra ~10% of my total Loanpad balance while earning the higher rate. Its worked very well for me so far. I figure that if there ever was a run on Loanpad, most funds would be sitting in Premium and my funds would be well placed in the exit queue. I should add that I'm certainly not expecting a run here. Very nice, I used to use a similar technique on AC before the house of cards fell down on that one. You have probs seen me post there since March and did unfontunely sell at a discount. I do still hold some fund there but overall, see that platform only as a long term investment. The most bullish indicator is that Loanpad did not take any liquidity actions during COVID peak, which is impressive to say the least and I wounder if it has largely been overlooked by many retail investors on this board due to it being basically hidden here. It really does seem they may have struck Gold on the liquidity issue by having third party interests back lenders and have exposure to the same loan book. Fusing institutional and retail into one, rather than the institutionals first, retail second that we do seem to see since the start of P2P. My cash I'm looking to cover is dry powder for stock corrections, so its access is much more needed in a timely manner. However, I will most likely distubute a majority into the 60 days, then change into access as I invest more of my spare cash. 25% in loanpad and 75% in FSCS. The oversight to be careful of when cover dry powder, is when you need it the most, every other assest is likely to be under stress. (general market crash)
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Post by Harland Kearney on Dec 12, 2020 14:22:37 GMT
Over 10% of the portfolio is in cash right now. Impressive but also somewhat curious as to why? It is just asking for me to put some parked cash in there isn't it  |
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withnell
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Post by withnell on Dec 14, 2020 11:53:06 GMT
Over 10% of the portfolio is in cash right now. Impressive but also somewhat curious as to why? It is just asking for me to put some parked cash in there isn't it Loanpad have consistently had half a mil in spare cash liquidity to cover withdrawals, but over 60% of the current balance is 650k repaid on 7th Dec
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benaj
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Post by benaj on Dec 22, 2020 10:20:15 GMT
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Post by Ace on Dec 22, 2020 10:26:15 GMT
Yes, I'm no expert, but didn't seem unreasonable to me. Some may not like the maximum initial loan term being extended to 24 months as it would result in a longer wait for repayment if liquidity ever died up.
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rocky1
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Post by rocky1 on Dec 22, 2020 12:59:05 GMT
probably due to covid but at the moment with 2 loans overdue[no ICF] 3 loans extended [no ICF] and 1defaulted loan. LP must be looking at different scenarios so extending loan terms is not to bad.it is when T&Cs start changing to the detriment of lenders and more to the platforms gain in certain situations that the alarm bells should start ringing
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Post by Ace on Dec 22, 2020 15:14:17 GMT
probably due to covid but at the moment with 11 loans overdue[no ICF] 3 loans extended [no ICF] and 1defaulted loan. LP must be looking at different scenarios so extending loan terms is not to bad.it is when T&Cs start changing to the detriment of lenders and more to the platforms gain in certain situations that the alarm bells should start ringing I think you have misunderstood rocky1. E.g. I can only see 2 loans that are overdue [no ICF], 1 overdue [ICF], 3 extended, and 1 defaulted. Some of these have many tranches though.
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rocky1
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Post by rocky1 on Dec 22, 2020 15:55:03 GMT
i stand corrected ACE and have edited post was just flicking through after email.i am also quite heavy in LP at moment and can well do without any more shocks.
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Post by Harland Kearney on Dec 22, 2020 17:39:21 GMT
Doesn't alarm me too much, as others pointed out its the ToS rules that put Loanpad in a position of "shut up we know best" that rings the alarm bells. I posted here before saying I was hesitant to use short term money in these accounts and clearly, this is why and stated this themselves in the email.
I think they are taking understandable steps. COVID is here to stay for 2021 as well as Brexit most likely have them running pretty steep scenarios. From what I've read here they handled COVID better than other platforms (maybe the best?) so I am confident in them for the rocky 2021 bumpy road ahead.
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Post by Ace on Dec 22, 2020 23:05:57 GMT
Only 6 out of 40 of the current loans have expected completion dates beyond 12 months, representing 20% of funds on the platform. So 80% of funds (incuding the 7.6% of unassigned funds) are due to be released in under 1 year.
Personally I'm happy for LP to lengthen their Maximum term if it helps them find more suitable loans without having to chase lower rates.
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Post by Ace on Dec 23, 2020 12:55:39 GMT
We now know why the Ts&Cs were updated yesterday. A new 2 year loan was issued today for £1.5m (£750k drawn down today).
This takes the total existing commitments to this borrower to £3m (16.75% of total funds on the platform today).
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