ceejay
Posts: 975 
Likes: 1,149
|
Post by ceejay on Jun 14, 2020 7:43:50 GMT
A load of people panic sold the MLA in March April at 15 - 20%, stuff that sells near par these days. I doubt anyone is going to sell the AA for those rates now. My calculation, which may be completely wrong, is that these are loans of generally reasonable quality and this platform will always make a positive return on a diversified portfolio. Give it time. Good point, well illustrated by the hard data in bg 's excellent thread p2pindependentforum.com/thread/13411/loans-available-discount-ac So here's a hypothetical musing. If you were a responsible P2P platform and saw an urgent demand from your investors to be able to sell their AA holdings at discounts so they could get the ** out of here, and you also saw unnecessarily-panicked discounts flying around on your MLA, and you had the means to enable a discounted market in those AA holdings, what would you do? Release it into the middle of the panic, thus enabling some of your customers to rip themselves off by selling at crazy discounts? Or just hold back for a week or three, knowing that wouldn't make any difference to anyone in the long run but might just save a few people an unnecessary loss? I'm not suggesting, BTW, that AC have been deliberately stalling in this way, but the effect of the process having taken a while has almost certainly saved several people from significant losses.
|
|
Mikeme
Member of DD Central
Posts: 428
Likes: 331
|
Post by Mikeme on Jun 14, 2020 7:56:33 GMT
A load of people panic sold the MLA in March April at 15 - 20%, stuff that sells near par these days. I doubt anyone is going to sell the AA for those rates now. My calculation, which may be completely wrong, is that these are loans of generally reasonable quality and this platform will always make a positive return on a diversified portfolio. Give it time. I was one of those that sold at some big discounts. I like, I think many others that sold were totally over invested in AC and would not have had enough free cash for the long period of time. I thought the covid crisis would go on for. In saying that because we had been in AC for some years on every loan even after discount made more than with the banks. I fully accept it was my decision to LEND via AC. Again as I have said before we lenders are fortunate compared to many borrowers. The rogues (Scottish castle owners come to mind should be given no quarter) My opinion only.
|
|
|
|
Post by captainconfident on Jun 14, 2020 9:30:24 GMT
I must say I've been surprised that some of the ostensibly vulnerable properties such as pubs and hotels have seen their MLA discounts decrease in line with other projects. As a CAMRA member, I was quite overweight (ha ha ha! I'm delighted at that line!) in pubs and happily sold mine at 3% disco. But when the gvt finally allows them to reopen (And the rest of the EU have allowed their cafes to open since 1st June), and they begin to trade and recommence repayment, I'll be happy to have them back at par. Just to say, my BMI is quite normal inspite of the real ale. Mikeme I quite understand what you mean. I'm also too heavily invested in Assetz but can afford to wait it out. ceejay Looking back at the forum posts from the time AC first proposed an AA trading facility, there were a lot of people declaring that they would happily dump their holdings for a 15- 20% haircut. Probably not deliberate by Assetz, but it has averted a disorderly turbulence that may well have attracted negative attention to the platform. What I'm waiting for is for AC to start offering us new business. I'm afraid that they will do a Thincats and take on the business finance themselves leaving us in limbo. Normal market conditions is where they offer us stuff and we buy it. I'm still keen to invest. |
|
IFISAcava
Member of DD Central
Posts: 3,692
Likes: 3,018
|
Post by IFISAcava on Jun 14, 2020 9:53:05 GMT
There was a lot of trading going on. I myself bought some stuff at 10-25% discount and immediately sold on at 5-10% discount.
I also got out of some potentially toxic loans and loans I was (riskily in new circumstances - e.g. diamond loan) overweight on at larger discounts than strictly necessary just to get ahead of the queue. But the hit to my XIRR to reduce my AC holding by >75% has been well under 1%, assuming of course there aren't too many defaults on the loans I have remaining.
|
|
ceejay
Posts: 975
Likes: 1,149
|
Post by ceejay on Jun 14, 2020 11:57:00 GMT
... What I'm waiting for is for AC to start offering us new business. I'm afraid that they will do a Thincats and take on the business finance themselves leaving us in limbo. Normal market conditions is where they offer us stuff and we buy it. I'm still keen to invest. But what has to happen before they can offer new business to retail investors? AIUI, the AAs were an essential part of the model, providing the grease that kept the wheels turning, as well as offering opportunities for investors who do not have the time or inclination to go manual. The question for me is, does the AA Trading facility provide the long term solution to keeping the AAs viable, or is it just an expedient way of managing a short-term problem? If the latter, I can't help feeling that something else would have to change before investors will have enough confidence to commit large sums to the AAs again, and therefore enable new retail-funded loans.
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Jun 14, 2020 12:52:12 GMT
... What I'm waiting for is for AC to start offering us new business. I'm afraid that they will do a Thincats and take on the business finance themselves leaving us in limbo. Normal market conditions is where they offer us stuff and we buy it. I'm still keen to invest. But what has to happen before they can offer new business to retail investors? AIUI, the AAs were an essential part of the model, providing the grease that kept the wheels turning, as well as offering opportunities for investors who do not have the time or inclination to go manual. The question for me is, does the AA Trading facility provide the long term solution to keeping the AAs viable, or is it just an expedient way of managing a short-term problem? If the latter, I can't help feeling that something else would have to change before investors will have enough confidence to commit large sums to the AAs again, and therefore enable new retail-funded loans. I think we have to consider that the virus problem was/is an unprecedented unique event which no-one would plan for - you would not plan to run your business with the capacity to survive it and its consequences. It followed, imo, a near crisis in liquidity caused by the new FCA rules in December. You can have liquidity problems from less serious events, and there was a queueing system to deal with that. However, investor behaviour can easily turn a short-term liquidity problem into a run. The SM for access accounts would have no use outside of a liquidity problem. But the fact of the existence of the SM and the ability to sell at a discount would act as a safety valve against the pressure building to a run, as well as giving new investors some confidence that their cash in a Quick Access Account cannot all be tied up for years. I take responsibility for having too much in those tempting Access accounts - and had to take a bigger hit elsewhere. But then I had got away with high exposure to p2p for years, and overall - over seven years - I have done very well (so far).
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Jun 14, 2020 12:58:59 GMT
Are there capital gains implications of buying at a discount on the AA SM?
If you buy at a 20% discount then withdraw, are you "selling" at a profit?
'Withdrawing' is complicated and involves going through the queue for which you were paid 20%. However, if you buy at 20% discount and then sell quickly at 10% discount the you have made a gain which I think is chargeable. Best to buy it into an ISA account, then you have no worries.
|
|
victors
Member of DD Central
Posts: 157
Likes: 86
|
Post by victors on Jun 14, 2020 13:03:37 GMT
Isn't the Capital Gains allowance around £12000. So unless you exceed that no tax is payable anyway.
|
|
|
|
Post by Harland Kearney on Jun 14, 2020 13:25:13 GMT
Isn't the Capital Gains allowance around £12000. So unless you exceed that no tax is payable anyway. For 2020-2021 it is £12,300 currently. Although people should seek their own tax advice of course for CGT. The amount is doubled for couples.
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Jun 17, 2020 21:36:03 GMT
From today's update: 'However, we hope to be able to release further details on the Access Account Marketplace in the coming weeks, which will enable lenders to buy and sell loan holdings at a discount if they want to.'
No hurry. Take your time. 
|
|
theta
Posts: 46
Likes: 44
|
Post by theta on Jun 18, 2020 9:31:09 GMT
The question for me is, does the AA Trading facility provide the long term solution to keeping the AAs viable, or is it just an expedient way of managing a short-term problem? If the latter, I can't help feeling that something else would have to change before investors will have enough confidence to commit large sums to the AAs again, and therefore enable new retail-funded loans. The very existence of a liquid secondary market is a long term solution to keeping the AAs viable, in much the same way that a stock market makes fractional ownership of a company (and therefore its earnings in the very distant future) viable. If the current environment justifies a discount, and the market clearing price is say 95%, this is fine, all it means is that new money can come in to take the implied higher yields available. This is how publicly traded closed end funds work as well. We saw some very big discounts in March and April, but the market cleared and three was a recovery. If AA had the SM active back then we would probably have seen the same thing.
|
|
rscal
Posts: 985
Likes: 537
|
Post by rscal on Jun 18, 2020 11:54:19 GMT
theta what is an SM 'aviator'?
Thank you.
|
|
rscal
Posts: 985
Likes: 537
|
Post by rscal on Jun 18, 2020 11:59:00 GMT
Why would I buy AA SM when I already have a significant proportion in that pool already? (the remainder being nearly all in MLA)? Just asking for anyone's thoughts on this. In the MLA I can pick up and sell individual loans. Won't the necessity for discount as a form of "carry trade" for AAs imply rather larger discounts compared to the MLA range currently '1-5%'?
On the other hand ... 5% (top of MLA range) would be 1 year's interest up front - and you'll get some interest and release of capital in the normal course of time - so perhaps it's the psychology of the buyer which will lead here but I can't see the buyers not already being MLA focused individuals (i.e. not 'newbies')
|
|
puddleduck
Member of DD Central
Posts: 537
Likes: 489
|
Post by puddleduck on Jun 18, 2020 12:27:52 GMT
Why would I buy AA SM when I already have a significant proportion in that pool already? The AA SM isn't really focused at you as a buyer - rather I see it that it will attract new money or even new investors to the platform. I can see it being appealing to institutional investors with deep pockets - ie invest 100k, get 110k of holdings, assuming 10% discounting for example. The platform needs people with deep pockets to really make a dent in the liquidity problem, and this will be far more effective than a cashback type promotion to attract new funds.
|
|
theta
Posts: 46
Likes: 44
|
Post by theta on Jun 18, 2020 13:33:36 GMT
theta what is an SM 'aviator'?
Thank you.
Autocorrect failure I think. I meant if it was in place, I must have intended to type active.
|
|
