IFISAcava
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Post by IFISAcava on Apr 27, 2020 17:09:22 GMT
Now then. The actual discounted worth of the QAA loan holdings, that will be an interesting one. What happens though if someone with no current QAA holdings were to, say, buy just £100 of the QAA at a 5% discount in their freshly minted QAA? In the current bottom-up payout mechanism, they would have their holding relatively quickly redeemed at par when the handle is cranked and make a quick fiver plus a bit of interest. That really doesn't seem fair, so would the mechanism be changing to proportional alongside this change? If the answer is "we hadn't thought of that" ..... This is the point I raised when this was first muted.
From my previous post
If a secondary market was made for AA there would have to be strict rules about withdrawals/interest otherwise the AA holders who are in the pool for payments would be worse off.
Let say B Lender needs cash, he has £200,000 in the QAA pool for payments, less now is coming out as no new money entries the AA accounts because you can buy in at a discount. He can't wait so he sells £100,000 at 20% discount.
Then 80 small lenders buy £1000 each.
They all request withdrawals (why not, when paid out 25% profit + interest while waiting) therefore the withdrawal pool has 80 new people, the small lenders gets out quite quickly due to the disproportionate payment system. Not only has B Lender lost £20,000 but he payouts decrease due to the new entrants in the pool. When the the small lenders are paid out they get £1250 + interest, they will think I like this game, I will do it again.
At the very least these discounted accounts must be subordinate to money currently in the AA and must not be paid out during this or any future liquidity events, perhaps interest can also be withheld while a liquidly event is in progress.
If no restrictions are in place it will accelerate the reduction in quality of the loan book of any large lender as they will be get less money out and will end up with more bad loans.
Except that you very rapidly run out of small lenders willing to take the risk. Given the sums talked about this would be a drop in the ocean. Plus you don't HAVE to sell at a discount. If you NEED cash, there is a price to that liquidity, more so in the current market. The real price of your QAA holdings is shown in the MLA price for the loans, minus whatever is in the PF - but as sure as eggs is eggs it isn't currently at par. If you want par, you have to forgo liquidity. Furthermore, if you were to somehow subordinate the QAA chunks sold on the SM, all that will do is increase the discount needed to sell them, so you just lose another way.
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Post by angel19 on Apr 27, 2020 17:10:24 GMT
To my mind the most important thing here is that access accounts must continue to (or quickly return to) operating the way they were described when people invested. If a new feature is to be added to enable investors to sell their access holding to other investors then there must be safeguards to ensure all other investors in the access accounts are not disadvantaged and that it does not impact or reduce liquidity for them.
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Post by investor01010101 on Apr 27, 2020 17:11:51 GMT
Presumably, as per SM trading via the MLA, lenders will therefore also be invited to bid to purchase discounted Access Account holdings (as opposed to discounted offers taking precedence over existing Access Account withdrawal requests at par)? I really do not want to see an SM in AA holdings, this breaks the primary concept of AAs, I do not want this turning into some sort of Structured Financial Instrument AKA Collateralised Debt Obligation. This will lock up the AAs probably for good and those who do not want to sell at below par may way feel they have to just so they are not left with a falling asset. All of my assets in Assetz have already failed so nothing new here........................
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dave4
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Post by dave4 on Apr 27, 2020 17:12:31 GMT
Indeed. The mathematics and the assumption behind them are wrong and very substantially overstates the withdrawal requests and double counts an extremely substantial sum overlapping between MLA and AAs. We will continue to take little part in this board given the wild statements being made by a handful of posters, even in the face of repeatedly stated facts. , I would encourage you to continue to actively participate in the forum. Easy interaction with management was one of the factors which gave me confidence in AC when I was a new investor. If anything, your participation is more important than ever at the moment, so that you can set the record straight and help to build back the confidence of those who are the most sceptical of your methods. I second this, so far that (IT, chris) has worked courteously, promptly and explained issues/ fixes etc with the new shiny web site.This has probably kept a lot of people from just leaving . Input from assetz at this nervous time, is both reassuring and wanted. I know we could do with some good news, but honest bad news is better than NO NEWS!!. Thank you all at assetz for your hard work in the good times, now in the bad it's time to show us all your metal.
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cb25
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Post by cb25 on Apr 27, 2020 17:17:45 GMT
stuartassetzcapital , I would encourage you to continue to actively participate in the forum. Easy interaction with management was one of the factors which gave me confidence in AC when I was a new investor. If anything, your participation is more important than ever at the moment, so that you can set the record straight and help to build back the confidence of those who are the most sceptical of your methods. I second this, so far the (IT, criss) has worked courteously, promptly and explained issues/ fixes etc with the new shiny web site. This has probably kept a lot of people from just leaving . Input from assetz at this nervous time, is both reassuring and wanted. I know we could do with some good news, but honest bad news is better than NO NEWS!!. Thank you all at assetz for your hard work in the good times, now in the bad it's time to show us all your metal. Much as I welcome their involvement, I think you'll find it's the almost completely frozen Access Accounts that has kept a lot of people from leaving 
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Post by honda2ner on Apr 27, 2020 17:20:00 GMT
Can you tell us where this money will go, is it to be kept in the AAs so it benefits lenders staying in these accounts?
Also will this slow or in effect stop the process of AA lenders getting their money out at par?
Can the AA lenders have a vote on the preposed changes?
It is a trade between a buyer and seller, with the seller offing the buyer a discount for taking over their holding. There's no money entering or leaving the access accounts. Struggling with your statement "There's no money entering or leaving the access accounts". What's the point then? Surprised that any SM isn't tied to new money only (so as not to upset current queue position, when the queue comes back) and comes with withdrawal restrictions like a 90 day lock in before it can be sold or (as already mentioned) putting it directly into the 90Day account after the transaction completes to stop flipping for a quick buck.
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IFISAcava
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Post by IFISAcava on Apr 27, 2020 17:22:42 GMT
I've trimmed my MLA loans a little, but generally with 2% discount at a maximum. I'd be interested to know what others have done wrt MLA discounts and would do with any new system allowing AA discounts. I've offloaded a bit over 60% of my MLA - but I was quite heavy in AC (my largest platform along with PL). Huge rang of discounts offered depending on loan/market - I have been up to about 10% for some parts of some loans, but plenty has sold/is selling at minimal 0.5% discounts. My XIRR for the ISA account has consequently reduced from around 7.05% to currently 6.31%. Up until the end of the tax year (when the vast majority was sold), my discounts (including a few incurred during the year to sell out quickly from a few dodgy loans) were the equivalent of losing 17.5% of the interest I received in that tax year. Future defaults will need to be factored into that too - the equivalent of about 10% of interest was written off by AC for the year, though some of that likely to be recoverable. I'm selling in dribbles now as less liquidity to mop up it seems. But still liberating a few hundred a week. I don't have much in the access accounts (less than £1K) as I turned off the sweep just in time - so I wouldn't be selling any access money. I'd consider buying at the right discount though. However, I reckon you'd want a projected IRR into double figures to take on access account debt with such reduced liquidity. Then all of a sudden I sell nearly a thousand.
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alender
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Post by alender on Apr 27, 2020 17:30:47 GMT
This is the point I raised when this was first muted.
From my previous post
If a secondary market was made for AA there would have to be strict rules about withdrawals/interest otherwise the AA holders who are in the pool for payments would be worse off.
Let say B Lender needs cash, he has £200,000 in the QAA pool for payments, less now is coming out as no new money entries the AA accounts because you can buy in at a discount. He can't wait so he sells £100,000 at 20% discount.
Then 80 small lenders buy £1000 each.
They all request withdrawals (why not, when paid out 25% profit + interest while waiting) therefore the withdrawal pool has 80 new people, the small lenders gets out quite quickly due to the disproportionate payment system. Not only has B Lender lost £20,000 but he payouts decrease due to the new entrants in the pool. When the the small lenders are paid out they get £1250 + interest, they will think I like this game, I will do it again.
At the very least these discounted accounts must be subordinate to money currently in the AA and must not be paid out during this or any future liquidity events, perhaps interest can also be withheld while a liquidly event is in progress.
If no restrictions are in place it will accelerate the reduction in quality of the loan book of any large lender as they will be get less money out and will end up with more bad loans.
Except that you very rapidly run out of small lenders willing to take the risk. Given the sums talked about this would be a drop in the ocean. Plus you don't HAVE to sell at a discount. If you NEED cash, there is a price to that liquidity, more so in the current market. The real price of your QAA holdings is shown in the MLA price for the loans, minus whatever is in the PF - but as sure as eggs is eggs it isn't currently at par. If you want par, you have to forgo liquidity. Furthermore, if you were to somehow subordinate the QAA chunks sold on the SM, all that will do is increase the discount needed to sell them, so you just lose another way. Except that you very rapidly run out of small lenders willing to take the risk, no if you read what I said the 80 will return once cashed out but this time they have £1250 + interest.
But I did not buy in the MLA, if I had I would have received extra interest and any loan repayments would have been passed back to me not re-lent.
If you do not subordinate the QAA chunks sold you can kiss good by to the AAs as a product, who would now directly invest in AAs.
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dave4
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Post by dave4 on Apr 27, 2020 17:34:29 GMT
I second this, so far the (IT, criss) has worked courteously, promptly and explained issues/ fixes etc with the new shiny web site. This has probably kept a lot of people from just leaving . Input from assetz at this nervous time, is both reassuring and wanted. I know we could do with some good news, but honest bad news is better than NO NEWS!!. Thank you all at assetz for your hard work in the good times, now in the bad it's time to show us all your metal. Much as I welcome their involvement, I think you'll find it's the almost completely frozen Access Accounts that has kept a lot of people from leaving And that Obviously.  But my point still stands
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IFISAcava
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Post by IFISAcava on Apr 27, 2020 17:35:54 GMT
Except that you very rapidly run out of small lenders willing to take the risk. Given the sums talked about this would be a drop in the ocean. Plus you don't HAVE to sell at a discount. If you NEED cash, there is a price to that liquidity, more so in the current market. The real price of your QAA holdings is shown in the MLA price for the loans, minus whatever is in the PF - but as sure as eggs is eggs it isn't currently at par. If you want par, you have to forgo liquidity. Furthermore, if you were to somehow subordinate the QAA chunks sold on the SM, all that will do is increase the discount needed to sell them, so you just lose another way. Except that you very rapidly run out of small lenders willing to take the risk, no if you read what I said the 80 will return once cashed out but this time they have £1250 + interest.
But I did not buy in the MLA, if I had I would have received extra interest and any loan repayments would have been passed back to me not re-lent.
If you do not subordinate the QAA chunks sold you can kiss good by to the AAs as a product, who would now directly invest in AAs.
Return after how long? And if you NEED the money, presumably you'd quite like them to return - who else is going to buy your QAA debt from you? Liquidity has a cost - if it's too high, then don't use it.
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alender
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Post by alender on Apr 27, 2020 17:38:55 GMT
I think this is a good move by AC to add a secondary market to the QAA. At least they are increasing lender options. Also, I would be more inclined to invest in an access account with a secondary market.At par? With no exit route at par for the forseeable future? Well I certainly was not expecting this when I invested, I thought I was investing in a simple AA, this looks AC are going to create a CDO which will have no floor and a cap and only tradable through AC. It can fall to any amount of discount but will be capped at par as no one will buy at a premium when you can go in at par directly in the AAs. Did not see this in the T&Cs.
I can see a lot of flipping going on with this new instrument, perhaps we can get some candle graphs so traders can analyse and move in and out for quick profits or even some spread betting options and how about some crypto loans.
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IFISAcava
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Post by IFISAcava on Apr 27, 2020 17:48:18 GMT
I've offloaded a bit over 60% of my MLA - but I was quite heavy in AC (my largest platform along with PL). Huge rang of discounts offered depending on loan/market - I have been up to about 10% for some parts of some loans, but plenty has sold/is selling at minimal 0.5% discounts. My XIRR for the ISA account has consequently reduced from around 7.05% to currently 6.31%. Up until the end of the tax year (when the vast majority was sold), my discounts (including a few incurred during the year to sell out quickly from a few dodgy loans) were the equivalent of losing 17.5% of the interest I received in that tax year. Future defaults will need to be factored into that too - the equivalent of about 10% of interest was written off by AC for the year, though some of that likely to be recoverable. I'm selling in dribbles now as less liquidity to mop up it seems. But still liberating a few hundred a week. I don't have much in the access accounts (less than £1K) as I turned off the sweep just in time - so I wouldn't be selling any access money. I'd consider buying at the right discount though. However, I reckon you'd want a projected IRR into double figures to take on access account debt with such reduced liquidity. Then all of a sudden I sell nearly a thousand. Probably the windmill repayments being reinvested
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Post by elf on Apr 27, 2020 17:55:23 GMT
It has been pointed out that several posts on this forum are ignoring a number of facts stated previously and also above. To repeat those facts and/or clarify them further; - The Access Accounts are not funding new loans at this time. Any potential new loans visible in the queue that are indicated to be drawn down soon should not be considered to change this position as they are paused.
- Funding of new loans would slow withdrawals and prevent funding of your existing property development project loans to completion and so we have stopped that activity for the time being to focus on existing borrowers and the security of your capital.
- We are therefore seeing vastly reduced corporate income as a result of seeking to protect the value in your existing loan book and are not profiting from the continued funding of your part completed loans, quite the opposite.
- All Access Account investors are part owners of many part funded property development loans, mostly housing stock. We do not earn arrangement fees from these new drawdowns but would if we were doing new lending, which we are not. We are disadvantaged by this stalled lending market, as you are.
- Failure to fund development loans would likely lead to very substantial losses in normal times and in these times could be far worse.
- We have not furloughed our lender support desk or our credit team as some suggest, however they are incredibly busy as you would expect in these times.
- The vast majority of our Access Account investors, over 75%, have chosen to remain fully invested during these turbulent times and have no withdrawal requests pending. In the meantime, we are expecting to continue to pay healthy interest on the Access Accounts, even after the new and temporary lender fee and the fact that some borrowers have stopped paying their monthly payments at present.
- We will be announcing, imminently, new functions to allow trading in the Access Accounts to permit people to potentially release their cash more quickly but without impacting on the funding of in-flight property development loans. This new functionality will not suit everyone, but it will provide another option to those who may wish to release some or all of their capital urgently.
Thank you for your patience in these difficult times.
I welcome the addition of a discounted secondary market giving the flexibility to sell under extraordinary market conditions. What I would appreciate Chris/Stuart confirming is 1. Can sales can be made from all access accounts (quick/30d/90d) 2. Can Sales be made from both ISA and non ISA accounts 3. Can you put money into the discounted secondary market whilst still having it stitting in the queue for par sale in QAA or in the release queue from 30d/90d accounts 4. Can you make sure an account balance can be taken down to zero (rather than being left with "<0.01p" in an account) 5. Can holding from GBBA/Prop secured not be disposed of in similar fashion or even just offered as a donatation for someone else to accept if getting rid of small balances. Points 4 & 5 are because as well as my own holdings I am an executor for an account where I want to zero balances and close.
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r00lish67
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Post by r00lish67 on Apr 27, 2020 17:56:48 GMT
It is a trade between a buyer and seller, with the seller offing the buyer a discount for taking over their holding. There's no money entering or leaving the access accounts. Struggling with your statement "There's no money entering or leaving the access accounts". What's the point then? Surprised that any SM isn't tied to new money only (so as not to upset current queue position, when the queue comes back) and comes with withdrawal restrictions like a 90 day lock in before it can be sold or (as already mentioned) putting it directly into the 90Day account after the transaction completes to stop flipping for a quick buck. I think what Chris means is that at a holistic level the amount invested in the access accounts would stay the same when SM sales take place. The point is that a willing buyer will relieve the willing seller of their loan holdings at an agreed price. The amount invested overall stays the same, but the 2 people should be happier, one with some discounted loans and the other a wad of cash. Ref: new money, it wouldn't necessarily have to be new to the platform, but it would have to be liquid cash (i.e. not already stuck in the QAA) as otherwise that would create some sort of ouroborous loop.
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SteveT
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Post by SteveT on Apr 27, 2020 18:28:53 GMT
At par? With no exit route at par for the forseeable future? Well I certainly was not expecting this when I invested, I thought I was investing in a simple AA, this looks AC are going to create a CDO which will have no floor and a cap and only tradable through AC. It can fall to any amount of discount but will be capped at par as no one will buy at a premium when you can go in at par directly in the AAs. Did not see this in the T&Cs.
I can see a lot of flipping going on with this new instrument, perhaps we can get some candle graphs so traders can analyse and move in and out for quick profits or even some spread betting options and how about some crypto loans.
What "new instrument"? An existing holding of Access Account loans is sold directly from one lender to another, at a market price they both are happy with. No different to any other P2P secondary market. Flipping in P2P has existed for as long as P2P itself.
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But my point still stands