mark123
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Post by mark123 on Feb 28, 2020 12:31:21 GMT
If the RS model, interest rate and provision fund were well tuned before corona virus, should we be concerned that there is now an increased risk of debt default which makes the provision fund inadequate?
A small percentage of borrowers taking two weeks to self-isolate could put them in a position where they cannot repay their loans.
Share prices have adjusted on the belief that the virus will have an impact on company performance. A few companies may go out of business, meaning some employees cannot repay.
The provision fund safety margin is so small that a downturn could make it inadequate.
What do people think?
Good luck,
Mark
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r00lish67
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Post by r00lish67 on Feb 28, 2020 12:38:01 GMT
If the RS model, interest rate and provision fund were well tuned before corona virus, should we be concerned that there is now an increased risk of debt default which makes the provision fund inadequate? A small percentage of borrowers taking two weeks to self-isolate could put them in a position where they cannot repay their loans. Share prices have adjusted on the belief that the virus will have an impact on company performance. A few companies may go out of business, meaning some employees cannot repay. The provision fund safety margin is so small that a downturn could make it inadequate. What do people think? Good luck, Mark PF cash has fallen by 10%+ in two of the last three months (and 5% in the intervening one). I've no idea of the implications of the virus, but if that's 'well tuned' then I'd be a bit concerned about what it would look like if things go wrong. PF cash in February 2019 = £14.1m PF cash in September 2019 = £11.9m PF cash in February 2020 = £8.3m edit: Fun fact - despite the above, the headline Interest Coverage Ratio RS use has increased from 112% in April 2019 to 117% today.
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alender
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Post by alender on Feb 29, 2020 11:02:42 GMT
I think one of major effects of the Corona Virus on investments is to change the Risk/Reward ratio, if there is a downturn in the world and UK economies as predicted this will increase the risk of P2P but I suspect the reward will not increase by much (if at all).
However equity rewards have increased substantially in the last week to reflect the risks. A number of FTSE 100 companies are paying higher dividends that most P2P protected accounts (PFs). Of course you can lose money on the share price if unlucky or bought at wrong time (not sure we are near the bottom yet) but there should be no possibility of being locked in. For me there are a number of good companies with good balance sheets and long histories paying dividends in excess of P2P accounts which offer lower risk in the medium to long term especially if you spread the risk, also there are smaller ones (usually funds, some lending money similar to P2P) paying dividend interest.
But please Do Your Own Research.
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Post by moonraker on Apr 1, 2020 16:58:15 GMT
Just had an email from Ratesetter reminding me of the 2019/20 ISA deadline. Wonder if anyone will rush to take one out?
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Post by shanghaiscouse on Apr 1, 2020 17:22:53 GMT
Check the terms of business. They are allowed to announce a "Stabilsation Period", cut all returns and even do a capital reduction (i.e. take some of your investment and use it to reinforce provision fund). All this is coming. They are in a terrible financial position. The loan book is shrinking, meaning their revenues are shrinking, and they have burnt through their cash. They have never been cash positive and have needed £15-20m of fresh capital every year to stay afloat. The chance of raising funds in this environment is zero. You are going to start taking some big losses, there is nowhere else the money is going to come from except you.
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Post by bracknellboy on Apr 1, 2020 17:30:54 GMT
Thankfully, assuming my just instigated withdrawl of £350 from my holding account comes through, I'll be down to my last £50, having been in natural run-down and withdraw mode for some considerable time. I was never "big" in RS, maybe ROM £30k at peak. It is one of the few platforms I will come out of with a decent profit from.
likewise I had been winding down my AC position, especially cash swept into the access accounts having been withdrawn 2 or 3 weeks ago.
On the other hand, when it comes to my much larger equity positions, I've been like a rabbit stuck in the headlights.
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Post by bracknellboy on Apr 1, 2020 17:34:59 GMT
...
However equity rewards have increased substantially in the last week to reflect the risks. A number of FTSE 100 companies are paying higher dividends that most P2P protected accounts (PFs). Of course you can lose money on the share price if unlucky or bought at wrong time (not sure we are near the bottom yet) but there should be no possibility of being locked in. For me there are a number of good companies with good balance sheets and long histories paying dividends in excess of P2P accounts which offer lower risk in the medium to long term especially if you spread the risk, also there are smaller ones (usually funds, some lending money similar to P2P) paying dividend interest.
But please Do Your Own Research. Like the banks that have retracted on £8bn of already promised dividends ? I think over the coming months there will be very many (the majority ?) of companies that decide to not pay a dividend to hoard cash, and with various precedents set they will have plenty cover for doing so. Except the supermarkets of course. And maybe utilities.
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alender
Member of DD Central
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Post by alender on Apr 1, 2020 18:03:04 GMT
It was the BOE that stopped the banks paying dividends, this was mostly priced in. Shell said they will honour the latest dividend (over 10%) and they have never dropped the dividends since second world war, Car insurance companies may be OK due to the lack of accidents, box manufactures may be good due to increased home deliveries, soap manufactures as even when this all over I think people will be in the habit of using more soap, gold miners as people who have been burnt may run to gold.
The question is where is the best place to put your money, perhaps P2P but I think not.
Should be plenty of opportunities for the brave/clever but timing is everything as always DYOR.
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Post by ruralres66 on Apr 1, 2020 20:40:41 GMT
Just had an email from Ratesetter reminding me of the 2019/20 ISA deadline. Wonder if anyone will rush to take one out? Dear B With the tax year ending soon we wanted to share some important information about the key ISA allowance and payment deadlines.
Find out more
If you have any questions please call us on 020 3142 6226 or email at invest@ratesetter.com.
The RateSetter Team.......
Yeh, right on, after 59 minutes waiting to get through today I hung up!
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agent69
Member of DD Central
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Post by agent69 on Apr 1, 2020 20:50:48 GMT
...
However equity rewards have increased substantially in the last week to reflect the risks. A number of FTSE 100 companies are paying higher dividends that most P2P protected accounts (PFs). Of course you can lose money on the share price if unlucky or bought at wrong time (not sure we are near the bottom yet) but there should be no possibility of being locked in. For me there are a number of good companies with good balance sheets and long histories paying dividends in excess of P2P accounts which offer lower risk in the medium to long term especially if you spread the risk, also there are smaller ones (usually funds, some lending money similar to P2P) paying dividend interest.
But please Do Your Own Research. Like the banks that have retracted on £8bn of already promised dividends ? I think over the coming months there will be very many (the majority ?) of companies that decide to not pay a dividend to hoard cash, and with various precedents set they will have plenty cover for doing so. Except the supermarkets of course. And maybe utilities.
And delivery people
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Post by BrianC on Apr 1, 2020 22:44:42 GMT
“Yeh, right on, after 59 minutes waiting to get through today I hung up!” Try emailing them. I did and got a helpful response very quickly! (emailed them late evening, got reply by early afternoon next day)
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robski
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Post by robski on Apr 2, 2020 7:35:31 GMT
Like the banks that have retracted on £8bn of already promised dividends ? I think over the coming months there will be very many (the majority ?) of companies that decide to not pay a dividend to hoard cash, and with various precedents set they will have plenty cover for doing so. Except the supermarkets of course. And maybe utilities.
And delivery people Whole food supply chain right now, busiest March for us ever I suspect we will see a drop to follow but hopefully thats when the rest of the economy is picking up so we wont be contributing to the drop
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corto
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Post by corto on Apr 2, 2020 8:14:47 GMT
Just had an email from Ratesetter reminding me of the 2019/20 ISA deadline. Wonder if anyone will rush to take one out? I've topped it back up to the original level + interest in order not to lose the tax advantage. Will probably transfer a part to an S&S ISA after the 6th. For info: iWeb is currently not accepting transfers in, because they are 'too busy' This may apply to other providers and slow transfers down.
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