Undervalued debentures on the secondary market

Because each project has a different model the debentures are difficult to value.  

For I** P**** S****** there is a 15% additional interest payable if one project has planning permission I think by the time the initial period of the debenture has passed in 1 year 4 months time. The last update states that planning permission has been applied for for one project and that it is expected to take a year.  For other projects there are plans to submit planning applications during 2019.  There is also provision for the debentures to be extended by 2 years at a rate of 6%.  This is, therefore, a gamble on whether the planning permission will be gained on time; however, the calculator uses the 15% rate to calculate the end return but I reckon there is at least a 50-50 chance that it will be extended by two years at a rate of 6%.    

I suspect that a lot of the trades on the secondary market are by traders.  For example, I put something up for sale to reduce my exposure to risk on that project  and someone bid at  my reserve price; meanwhile he also offered the same debenture for the same amount for sale and then,  when my sale period was over, did not immediately agree to proceeding with the purchase. He did, though ask to proceed with the purchase when he had received an at least equivalent bid on his sale offer.  This seems to be trading and using the time lags in the system to avoid any risk.  

I think the market place has changed since the missed payments and restructuring of M***** V*****C** and related missed payments on M***** V*****B******,  the proposals currently being put to lenders for G*** S******* and the repayment with only 2% for U***** D**** G********.  

Before these events high premiums were being paid. The calculator has also had an effect and made offers more sensible. 

There has been no update since June 2018 for C****** R********* G********** so I have sold some of my  holding thinking that capital + 10% now is a fair enough deal, although I will hang on to some as it might pay off. Maybe this explains why the high returns are  not attracting higher purchase offers?

The market is strange but it takes a bit of homework to work out the risk with each loan. Clearly those paying back capital as they go along, amortising? I believe, are much less risky and as the years go by they pay a high rate when the interest has been fixed to be equal in terms of cash returns along the whole period of the loan.  The deals that are most out of line are for small amounts so buyers and sellers not bothered enough to spend time reading the updates etc. I wonder if some are taking advantage of this and splitting loans into small parts for sale?

Yes, that is a possibility that had not occurred to me. 

Good assessment. Getting out of GS and UDG was part of my de-risking approach last year after MVC. I similarly reduced my exposure to CRG too.  I'll still accumulate Abundance debentures when they seem good value, but at a much lower level than before - especially now they are doing less new build renewables. I didn't go for the liverpool housing one either because it looked both optimistic and expensive for relatively low return.