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Post by garreh on Apr 3, 2020 12:35:31 GMT
The deployment rate is reducing (currently 98.3%) which means they have 1.7% lender cash on account, and that doesn't include their investor's cash. It's a hard time for any business so payback will be slow but they're getting there (this % was over 99% a week or so ago) That is positive news. I've also been monitoring it and it's been going down around 0.6%ish for the last couple of days. Based on my projection this means: 2 weeks from now = 89.2% 4 weeks from now = 80.8% (roughly half way through Liquidity Event) 6 weeks from now = 72.4% 8 weeks from now = 64% ... up to 90 days = 52.6% (end of the Liquidity Event) That's assuming of course the reduction rate remains the same. I'm not entirely sure what to make of these figures - I assume this is a overall positive thing? Does anyone know what the average deployment rate was prior to all of this? I would imagine Growth Street would monitor this deployment rate and once it reaches a sensible level they could then open up withdrawals - but I hope they do so in a fair way by allowing investors to withdraw e.g. x% of their portfolio per month.
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Post by garreh on Apr 3, 2020 12:57:13 GMT
www.growthstreet.co.uk/investingPersonally I do feel that what I have invested in has been misrepresented. Borrower repayments on 30 days would seem to be the exception rather than the norm (I had assumed 'subject to borrower repayments' meant no late payments/defaults). If many loans really are being repaid within 30 days then this should be an inherently liquid investment and not dependant on other platform investors for liquidity. This is obviously rubbish for all of us, but I'm afraid what they're doing now was clearly set out in their T&C. I specifically remember reading it and being rather concerned, but I went ahead with my investment knowing that. That is definitely poorly worded on Growth Street's part. It should add that the underlying loan is usually of longer duration but the platform itself breaks it up into rolling-30 day loans.
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Post by garreh on Apr 3, 2020 13:05:43 GMT
Could anyone explain why the "Estimated Days to Match" is currently at 3 days?
It seems odd given the liquidity issue investors are having to wait on average 3 days for loans to be matched?
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chris1200
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Post by chris1200 on Apr 3, 2020 13:49:29 GMT
The deployment rate is reducing (currently 98.3%) which means they have 1.7% lender cash on account, and that doesn't include their investor's cash. It's a hard time for any business so payback will be slow but they're getting there (this % was over 99% a week or so ago) That is positive news. I've also been monitoring it and it's been going down around 0.6%ish for the last couple of days. Based on my projection this means: 2 weeks from now = 89.2% 4 weeks from now = 80.8% (roughly half way through Liquidity Event) 6 weeks from now = 72.4% 8 weeks from now = 64% ... up to 90 days = 52.6% (end of the Liquidity Event) That's assuming of course the reduction rate remains the same. I'm not entirely sure what to make of these figures - I assume this is a overall positive thing? Does anyone know what the average deployment rate was prior to all of this? I would imagine Growth Street would monitor this deployment rate and once it reaches a sensible level they could then open up withdrawals - but I hope they do so in a fair way by allowing investors to withdraw e.g. x% of their portfolio per month. I think any kind of meaningful projections are a little premature, but it's definitely encouraging. As I've said above, I think the best withdrawal solution would be a queued one like other platforms. This means GS can maintain liquidity; whereas allowing % release of portfolios might just create the same situation in a few months. [Edit: Although, I suppose you could combine the two of these somehow - but that would get rather complicated] This is obviously rubbish for all of us, but I'm afraid what they're doing now was clearly set out in their T&C. I specifically remember reading it and being rather concerned, but I went ahead with my investment knowing that. That is definitely poorly worded on Growth Street's part. It should add that the underlying loan is usually of longer duration but the platform itself breaks it up into rolling-30 day loans. I suppose it's not the entire situation, but they are 30 day investments from the perspective of the lender (in normal times). Whether it's a revolving facility or an actual 30 day loan doesn't make much difference to the current situation as even if borrowers were *supposed* to actually repay and end the facility after 30 days, it doesn't mean they would - especially now. My point about the T&C was more generally related to the action GS are currently taking, though. Could anyone explain why the "Estimated Days to Match" is currently at 3 days? It seems odd given the liquidity issue investors are having to wait on average 3 days for loans to be matched? Which part of it doesn't make sense to you? Investors are basically being rotated around the loans every 30 days.* Where there's 100% deployment, this will be instant. Once the deployment % starts decreasing, there will be a lag unless lending is increased to up the deployment % again. (* that is, 30 days per investor - obviously each investor is on a different cycle)
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Post by nesako on Apr 3, 2020 13:55:29 GMT
The deployment rate is reducing (currently 98.3%) which means they have 1.7% lender cash on account, and that doesn't include their investor's cash. It's a hard time for any business so payback will be slow but they're getting there (this % was over 99% a week or so ago) That is positive news. I've also been monitoring it and it's been going down around 0.6%ish for the last couple of days. Based on my projection this means: 2 weeks from now = 89.2% 4 weeks from now = 80.8% (roughly half way through Liquidity Event) 6 weeks from now = 72.4% 8 weeks from now = 64% ... up to 90 days = 52.6% (end of the Liquidity Event) That's assuming of course the reduction rate remains the same. I'm not entirely sure what to make of these figures - I assume this is a overall positive thing? Does anyone know what the average deployment rate was prior to all of this? I would imagine Growth Street would monitor this deployment rate and once it reaches a sensible level they could then open up withdrawals - but I hope they do so in a fair way by allowing investors to withdraw e.g. x% of their portfolio per month. If I remember right, before the liquidity event it was hovering around 86% for deployment. Great that its moving to the right direction!
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Post by garreh on Apr 3, 2020 15:22:13 GMT
I think the best withdrawal solution would be a queued one like other platforms. This means GS can maintain liquidity; whereas allowing % release of portfolios might just create the same situation in a few months. [Edit: Although, I suppose you could combine the two of these somehow - but that would get rather complicated] The main issue I have with queueing is really down to it being implemented in a fair manner and prevent future issues. For example, Mr Bob might have 500k invested in P2P - they could withdraw that and Mrs Dorris in comparison with her piddly 1k investment could come after that. Such high value investors being able to fully withdraw simply because they were higher up in the queue doesn't seem particulary fair and at worse could cause liquidity issues again. So my suggestion is really to mitigate that somehow by allowing withdrawals but in a controlled manner and relative to the amount of your portfolio. As you say though, it could get complicated, however it definitely needs to be a consideration imo. Which part of it doesn't make sense to you? Investors are basically being rotated around the loans every 30 days.* Where there's 100% deployment, this will be instant. Once the deployment % starts decreasing, there will be a lag unless lending is increased to up the deployment % again. (* that is, 30 days per investor - obviously each investor is on a different cycle) I just find it odd that there is a liquidity issue i.e. lack of money to fund borrowers yet lenders are having to wait 3 days for loans to match. 3 days matching time is pretty long imo. I can't seem to recall it being that long even before the liquidity issue. If this was the max projected time then fair enough, but it's advertised as an average match time... if the platform is at 98% deployment rate something seems a bit off there.
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Post by Ace on Apr 3, 2020 15:43:44 GMT
There hasn't been any delay on my loans. Last two completed on 1st April and were lent out again the same day.
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chris1200
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Post by chris1200 on Apr 3, 2020 15:44:53 GMT
Which part of it doesn't make sense to you? Investors are basically being rotated around the loans every 30 days.* Where there's 100% deployment, this will be instant. Once the deployment % starts decreasing, there will be a lag unless lending is increased to up the deployment % again. (* that is, 30 days per investor - obviously each investor is on a different cycle) I just find it odd that there is a liquidity issue i.e. lack of money to fund borrowers yet lenders are having to wait 3 days for loans to match. 3 days matching time is pretty long imo. I can't seem to recall it being that long even before the liquidity issue. If this was the max projected time then fair enough, but it's advertised as an average match time... if the platform is at 98% deployment rate something seems a bit off there. Firstly the liquidity issue isn't so much that there isn't any money to fund borrowers as much as there is a very high risk of that imminently being the case. They need some decent slack and a fairly even flow of investments/withdrawals to keep this model going. Secondly, I see what you mean that just under 98% deployment doesn't translate directly to a 3 day wait (given that's c. 10% of a month). There are probably other factors at play here - e.g. loan renewal dates might not be evenly spread throughout the month - but we can have a look over the coming days and see if it varies. Edit: Or it's just completely inaccurate, based on this!! There hasn't been any delay on my loans. Last two completed on 1st April and were lent out again the same day.
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Post by morriscat on Apr 5, 2020 10:12:07 GMT
Agree Garreh. Doesn't have to be complicated. Howabout max 10k withdrawal per month per user?
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chris1200
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Post by chris1200 on Apr 5, 2020 16:50:23 GMT
Agree Garreh. Doesn't have to be complicated. Howabout max 10k withdrawal per month per user? Yes but, as I said above, the problem with this is that within days you revert back to exactly the same liquidity issue. Any withdrawal process coming out of the liquidity event has to have a queuing system which moves in accordance with liquidity levels on the platform (i.e. based on new investments, scaling down of lending etc.). So I'm afraid it does have to be a little complicated, although clearly not revolutionary given other platforms having similar systems.
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alender
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Post by alender on Apr 6, 2020 7:10:54 GMT
I can not see why we cannot be paid interest that has been collected and any capital repayments which are from loans when the revolving credit has not been taken up. This money must be going somewhere but not to the lenders, after all we own the loans so therefore we own the interest and capital repayments.
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Greenwood2
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Post by Greenwood2 on Apr 6, 2020 7:46:51 GMT
I can not see why we cannot be paid interest that has been collected and any capital repayments which are from loans when the revolving credit has not been taken up. This money must be going somewhere but not to the lenders, after all we own the loans so therefore we own the interest and capital repayments.
Borrowers may be increasing their borrowing requirements because of the virus, it seems their agreement allows them to increase up to their pre-agreed limit assuming they are not using all of it already.
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alender
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Post by alender on Apr 6, 2020 8:09:39 GMT
I can not see why we cannot be paid interest that has been collected and any capital repayments which are from loans when the revolving credit has not been taken up. This money must be going somewhere but not to the lenders, after all we own the loans so therefore we own the interest and capital repayments.
Borrowers may be increasing their borrowing requirements because of the virus, it seems their agreement allows them to increase up to their pre-agreed limit assuming they are not using all of it already. It would seem GS have promised money that they do not have i.e. this is P2P therefore the loans are owned by the lenders, therefore the interest and capital repayments are owned by the lenders. This could well be good money after bad and does not look good, I can only hope they have not promised too much money, I can see now why GS are planing a resolution event, at least it may stop this outflow but no doubt leave lender with large loses.
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chris1200
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Post by chris1200 on Apr 6, 2020 9:21:31 GMT
I can not see why we cannot be paid interest that has been collected and any capital repayments which are from loans when the revolving credit has not been taken up. This money must be going somewhere but not to the lenders, after all we own the loans so therefore we own the interest and capital repayments.
Because, although technically we own specific loans individually, the effect of GS's system is meant to be that we all own all loans equally (proportionately to our total investment). This is achieved through the provision fund and - should the provision fund fail - a resolution event where all loans are taken over by the provision fund and divided proportionately between all lenders to give an equal outcome. A platform like Ratesetter has a similar logic - the system matches you with specific loans, but risk is meant to be equalised across the platform regardless of which loans you're technically invested in. Although a resolution event hasn't been declared (yet), we are now in the zone where lender losses are very foreseeable. GS's system is one where all such losses should be felt equally (proportionately) by all lenders, so the system kicks in with a liquidity event to force all lenders to keep reinvesting their repayments - this ensures equality across all lenders. If, on the other hand, you start allowing some lenders (largely at random) to receive repayment of capital and interest and be able to withdraw this, this defeats the equality principle. Instead, these (re)payments will (I imagine) be built up to give a decent buffer of liquidity across the whole platform, to provide a fighting chance of resuming normal service for everyone, but likely with some new withdrawal arrangements.
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alender
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Post by alender on Apr 6, 2020 9:35:33 GMT
I can not see why we cannot be paid interest that has been collected and any capital repayments which are from loans when the revolving credit has not been taken up. This money must be going somewhere but not to the lenders, after all we own the loans so therefore we own the interest and capital repayments.
Because, although technically we own specific loans individually, the effect of GS's system is meant to be that we all own all loans equally (proportionately to our total investment). This is achieved through the provision fund and - should the provision fund fail - a resolution event where all loans are purchased by the provision fund and divided proportionately between all lenders to give an equal outcome. A platform like Ratesetter has a similar logic - the system matches you with specific loans, but risk is meant to be equalised across the platform regardless of which loans you're technically invested in. Although a resolution event hasn't been declared (yet), we are now in the zone where lender losses are very foreseeable. GS's system is one where all such losses should be felt equally (proportionately) by all lenders, so the system kicks in with a liquidity event to force all lenders to keep reinvesting their repayments - this ensures equality across all lenders. If, on the other hand, you start allowing some lenders (largely at random) to receive repayment of capital and interest and be able to withdraw this, this defeats the equality principle. Instead, these (re)payments will (I imagine) be built up to give a decent buffer of liquidity across the whole platform, to provide a fighting chance of resuming normal service for everyone, but likely with some new withdrawal arrangements. What I am saying is that money is being retuned to GS, this money is the property of the Lenders, where is it going? as you say it could be going to increased borrower requirements agreed by GS before this all started. In which case GS promised money it did not have, if it is going elsewhere I would like to know as it my money as this should be available to pay some interest and perhaps a small amount of capital repayment. I understand we cannot take away the revolving credit but surely GS have at least got some interest from borrowers.
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