blender
Member of DD Central
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Post by blender on Sept 2, 2020 7:58:49 GMT
Bids this morning at 9.2% and offers at 9%. The vultures are circling more closely to the carcasses and dying herbivores. Other metaphors are available.
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Post by bradley02 on Sept 2, 2020 8:24:57 GMT
The £1060000 new bridging loan was fully funded yesterday. Underwriters ( retail investors ) need to fund their bid. A reason for the increase in rates ? 90DAA interest rate reduction 1st September. 90DAA funds moved to QAA for sale at discount. Another reason ? Another theory. The bridging loan's interest rate is 9%. It is a 12 month loan. Selling AA funds at 9% discount and reinvesting in this loan at 9% you release your funds in 12 months at no loss if all goes well.
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Post by davee39 on Sept 2, 2020 9:59:04 GMT
I cannot see anyone selling at 9% discount to buy into a potentially risky bridging loan.
However the discount ups and downs may be influenced by psychological magic numbers.
In stock market trading many investors will 'fix' on a specific price to buy or sell. Because these are usually round numbers
the prices are rarely achieved because the herd moves in en masse.
The discount had been widely hyped as falling as result of the month end interest. This would be sufficient to tempt distressed
sellers to delay a sale. When the proposed fall did not happen these sellers would then join a scramble to the exit. The interest
payment having exactly the opposite effect to that predicted.
One magic number for the discount is 10%, a sale at 9.9% then seems like a win.
This is a very opaque market. Neither buyers or sellers have sufficient information to allow a 'rational' price to be determined.
Price is therefore determed by distressed sellers and optimistic buyers.
I have sold 1.5% of my holdings at a 9% discount. The losses hurt less when sipped slowly. I remain a gradual seller.
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Post by bradley02 on Sept 2, 2020 10:25:30 GMT
I cannot see anyone selling at 9% discount to buy into a potentially risky bridging loan. However the discount ups and downs may be influenced by psychological magic numbers. In stock market trading many investors will 'fix' on a specific price to buy or sell. Because these are usually round numbers the prices are rarely achieved because the herd moves in en masse. The discount had been widely hyped as falling as result of the month end interest. This would be sufficient to tempt distressed sellers to delay a sale. When the proposed fall did not happen these sellers would then join a scramble to the exit. The interest payment having exactly the opposite effect to that predicted. One magic number for the discount is 10%, a sale at 9.9% then seems like a win. This is a very opaque market. Neither buyers or sellers have sufficient information to allow a 'rational' price to be determined. Price is therefore determed by distressed sellers and optimistic buyers. I have sold 1.5% of my holdings at a 9% discount. The losses hurt less when sipped slowly. I remain a gradual seller. The £1.06m has now been fully funded from Underwriters (retail investors) cash accounts. Unless new external funds of £1m+ were deposited into cash accounts in a couple of days to fund this bridging loan, I can see a connection with the rates increasing with cash requirements in cash accounts to find U/W bids. Potentially risky bridging loan or not, the £1.06m was fully funded in just over 1 hour.
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Post by Harland Kearney on Sept 2, 2020 10:48:44 GMT
Maybe I am jumping the gun here, but would it not make sense that MLA buyers would be the least likely investors into the QAA (aside from the smart flippers). Generally, MLA buyers are the "sophisticated" investors on the platform, or in short, they know the QAA is a mixture of loans they would never hold in the MLA with a barge pole. I guess the market speaks for itself. I imagine this month's rates will either drop down from here on out, or they will continue to rise. It's only gonna take one panic email from AC or an unexpected announcement and we will firmly be in double digits again for sometime... It isn't even hard to predict that as a layman.
The underwriting may certainly have had an impact, but I find it hard to believe. Maybe the discounts reflect a reality check due to the previous email about possible liquidity. I understand that loan trading would only pause due to a lack of PF cover, but from the track record, we have seen for pausing loans in BlackBox accounts (GBBA, GEA, GBBA 2, PSA) many MLA investors may be burnt and not interested in acquiring any more zombie loans this year.
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cb25
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Post by cb25 on Sept 2, 2020 10:53:57 GMT
I cannot see anyone selling at 9% discount to buy into a potentially risky bridging loan. However the discount ups and downs may be influenced by psychological magic numbers. In stock market trading many investors will 'fix' on a specific price to buy or sell. Because these are usually round numbers the prices are rarely achieved because the herd moves in en masse. The discount had been widely hyped as falling as result of the month end interest. This would be sufficient to tempt distressed sellers to delay a sale. When the proposed fall did not happen these sellers would then join a scramble to the exit. The interest payment having exactly the opposite effect to that predicted. One magic number for the discount is 10%, a sale at 9.9% then seems like a win. This is a very opaque market. Neither buyers or sellers have sufficient information to allow a 'rational' price to be determined. Price is therefore determed by distressed sellers and optimistic buyers. I have sold 1.5% of my holdings at a 9% discount. The losses hurt less when sipped slowly. I remain a gradual seller. The £1.06m has now been fully funded from Underwriters (retail investors) cash accounts. Unless new external funds of £1m+ were deposited into cash accounts in a couple of days to fund this bridging loan, I can see a connection with the rates increasing with cash requirements in cash accounts to find U/W bids. Potentially risky bridging loan or not, the £1.06m was fully funded in just over 1 hour. I withdrew approx £2500 from the QAA yesterday at around 7.4% discount, mentally viewing the 'hit' I took as being covered by the Aug interest. Seeing the 9% discount on offer, I put £2000 back in at 9% hoping the discount will fall.
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iRobot
Member of DD Central
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Post by iRobot on Sept 2, 2020 11:22:57 GMT
The £1060000 new bridging loan was fully funded yesterday. Underwriters ( retail investors ) need to fund their bid. A reason for the increase in rates ? 90DAA interest rate reduction 1st September. 90DAA funds moved to QAA for sale at discount. Another reason ? Is it a 'given' that Underwriters are "retail investors"? If that is stated somewhere and I've missed it, then my apologies, but ... My preconception of how UWs operate was to have a chunk of cash available for underwriting, fund a loan at a discount, sell out at par (or better, where premia are available) and then rinse and repeat as many times as possible; the trick being - a balancing act, really - to remain as liquid as possible to take advantage of the best deals, not just from AC but from multiple lenders. So that preconception doesn't fit with a) retail lenders, nor b) anyone having to sell at a 9% discount on a low-yielding holding account just to perform a little bit of underwriting. That is just a preconception, though, so I'm happy to acknowledge I could be waaaaay off track with how things operate on AC - or even just generally.
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dead-money
Rocket to the Moon
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Post by dead-money on Sept 2, 2020 15:13:03 GMT
Wed 26/08/20 8am 8.2% / 9.9% (12% for £5K+) 10am 8.1% / 10.6% (11.6% for £5K+) Noon 8.0% / 9.6% 2pm 8.4% / 9.9% 4pm 8.3% / 10.0% (10.30% for £5K+) 6pm 8.2% / 9.9% Thu 27/08/20 8am 8.3% / 9.0%
Fri 28/08/20 3pm 8.2% / 8.9%
Sat 29/08/20 9am 8.0% / 8.3%
Sun 30/08/20 9am 8.1% / 8.5% (8.7% for £5K) 8pm 7.5%
Mon 31/08/20 10am 7.8% / 8.0% (8.3% for £5K, 8.5% for £10K) 10pm 7.6% / 8.3%
Monthly interest due
11am / 7.7%
5pm 7.9% / 8.6%
Wed 02/09/20 9am 9.0% / 9.2%
4pm 10.6% / 11.8% 5pm 9.0% / 10.0%
Thu 03/09/20 9am 9.1% / 9.9% Noon 9.9% / 11.1% (11.7% for £5K) 6pm 9.8% / 10.7%
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Post by honda2ner on Sept 2, 2020 15:16:05 GMT
The £1060000 new bridging loan was fully funded yesterday. Underwriters ( retail investors ) need to fund their bid. A reason for the increase in rates ? 90DAA interest rate reduction 1st September. 90DAA funds moved to QAA for sale at discount. Another reason ? Is it a 'given' that Underwriters are "retail investors"? If that is stated somewhere and I've missed it, then my apologies, but ... My preconception of how UWs operate was to have a chunk of cash available for underwriting, fund a loan at a discount, sell out at par (or better, where premia are available) and then rinse and repeat as many times as possible; the trick being - a balancing act, really - to remain as liquid as possible to take advantage of the best deals, not just from AC but from multiple lenders. So that preconception doesn't fit with a) retail lenders, nor b) anyone having to sell at a 9% discount on a low-yielding holding account just to perform a little bit of underwriting. That is just a preconception, though, so I'm happy to acknowledge I could be waaaaay off track with how things operate on AC - or even just generally. More likely to be VHNW individuals, some of whom hold substantial holdings in loans but can bring very large amounts of cash to bear at short notice. Last few days on the MLA there has been a massive increase in sales from 11.5 to 13% loans, most of which sailed through covid with almost nothing available to buy, suspect these are sales from underwriters as who in their right mind wants to sell a 13% loan with an LTV in the ~40s? Wonder what discounts the new loan will reach, should give an insight into the discounts AC had to offer underwriters to sweeten the deal. I'm playing the long game so exiting the AAs (made a bit with flipping but it's high risk and I'm allergic to black box accounts) and buying the sweeter loans in the MLA to hold until maturity.
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ian
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Post by ian on Sept 2, 2020 16:58:41 GMT
Is it a 'given' that Underwriters are "retail investors"? If that is stated somewhere and I've missed it, then my apologies, but ... My preconception of how UWs operate was to have a chunk of cash available for underwriting, fund a loan at a discount, sell out at par (or better, where premia are available) and then rinse and repeat as many times as possible; the trick being - a balancing act, really - to remain as liquid as possible to take advantage of the best deals, not just from AC but from multiple lenders. So that preconception doesn't fit with a) retail lenders, nor b) anyone having to sell at a 9% discount on a low-yielding holding account just to perform a little bit of underwriting. That is just a preconception, though, so I'm happy to acknowledge I could be waaaaay off track with how things operate on AC - or even just generally. More likely to be VHNW individuals, some of whom hold substantial holdings in loans but can bring very large amounts of cash to bear at short notice. Last few days on the MLA there has been a massive increase in sales from 11.5 to 13% loans, most of which sailed through covid with almost nothing available to buy, suspect these are sales from underwriters as who in their right mind wants to sell a 13% loan with an LTV in the ~40s? Wonder what discounts the new loan will reach, should give an insight into the discounts AC had to offer underwriters to sweeten the deal. I'm playing the long game so exiting the AAs (made a bit with flipping but it's high risk and I'm allergic to black box accounts) and buying the sweeter loans in the MLA to hold until maturity. Your absolutely right the only caveat I would add & the reason I’m very wary, is ACs dodgy valuations. There have been a couple #330 & H House spring to mind LTVs < 60% which have recovered 70% for investors ??
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marky
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Post by marky on Sept 2, 2020 18:00:44 GMT
Is the secondary market a blessing or a curse?
I can't help feeling depressed watching the desperate lenders offloading their AC investments at ever increasing discounts.
I wonder - when I come to sell - whether things will have gotten so bad that I will be looking at a 20% or even 30% haircut!
I thought we would have desperate sellers who had been stuck in the queue for months heading for the exit (after SM launch) but it seems discounts are getting WORSE not BETTER.
What do we think will trigger more investor confidence ? Or are we on a slippery slope to oblivion now?
Marky
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ian
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Post by ian on Sept 2, 2020 18:20:32 GMT
Is the secondary market a blessing or a curse? I can't help feeling depressed watching the desperate lenders offloading their AC investments at ever increasing discounts. I wonder - when I come to sell - whether things will have gotten so bad that I will be looking at a 20% or even 30% haircut! I thought we would have desperate sellers who had been stuck in the queue for months heading for the exit (after SM launch) but it seems discounts are getting WORSE not BETTER. What do we think will trigger more investor confidence ? Or are we on a slippery slope to oblivion now? Marky The secondary market was never a proper solution. Well done to anyone who for instance has dumped £50k @ 6% to pick up today’s offer. If the valuations are correct they should break even over 12 months. How much the AA will tank who knows. I was hoping some might reinvest interest / repayments and 1/9 would see people clear @ 7/5/4/2%. The number of strokes AC have pulled I suspect the ultimate winners will be lawyers etc when someone finally decides to pull the plug. To me this feels worse than lendy at least you made Hay on the interest and took a punt when to opt out. This feels like they’ve orchestrated a race to the bottom that could be a marathon. Lets hope property prices really pick up and we all ride the boom.
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garfield
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Post by garfield on Sept 2, 2020 18:28:42 GMT
Is the secondary market a blessing or a curse? I can't help feeling depressed watching the desperate lenders offloading their AC investments at ever increasing discounts. I wonder - when I come to sell - whether things will have gotten so bad that I will be looking at a 20% or even 30% haircut! I thought we would have desperate sellers who had been stuck in the queue for months heading for the exit (after SM launch) but it seems discounts are getting WORSE not BETTER. What do we think will trigger more investor confidence ? Or are we on a slippery slope to oblivion now? Marky Been waiting to add to my investments for months. Yes, whilst others were wanting to exit! Crazy!!
Timing... and the desire for longer term reasonable returns. Yes, we've been there. Been in P2P for 7 years. Definitely worth a punt, but I'll be keeping an eye on things.
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ian
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Post by ian on Sept 2, 2020 18:44:41 GMT
Is the secondary market a blessing or a curse? I can't help feeling depressed watching the desperate lenders offloading their AC investments at ever increasing discounts. I wonder - when I come to sell - whether things will have gotten so bad that I will be looking at a 20% or even 30% haircut! I thought we would have desperate sellers who had been stuck in the queue for months heading for the exit (after SM launch) but it seems discounts are getting WORSE not BETTER. What do we think will trigger more investor confidence ? Or are we on a slippery slope to oblivion now? Marky Been waiting to add to my investments for months. Yes, whilst others were wanting to exit! Crazy!!
Timing... and the desire for longer term reasonable returns. Yes, we've been there. Been in P2P for 7 years. Definitely worth a punt, but I'll be keeping an eye on things. And there it is in a nutshell Marky May make hay.... buying AA loans at 90% a % of defaults a % of cash  knows what he’s buying but it’s not what was marketed 12 months ago. Irrespective good luck to all.
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Post by Harland Kearney on Sept 2, 2020 19:12:01 GMT
The real two questions and tests for the SM will be when, 1. A loan becomes untradeable. We are in a market now, it won't react logically. I understand fully that its nothing more than a PF measure and supposed to be temporary in line with the terms of service. Too complicated will likely cause a minority of people to panic/to grow concerned. (If AC don't email a suspension of a AA loan, then the impact will be less. If they did send a email about the postion of AA as a result of said trade suspension. Then do I even need to say what may happen...) 2. Future unexpected Assetz Capital announcements. About bad news of course, mostly. The current short term trend is likely a result of individuals thinking it was going to drop further during the interest rate pay packet, but it didn't. By the end of the day, it actually went higher. This is what caused me to sell and was an obvious sell signal, to be honest. In the long term I'm fairly confident things will sort themselves out, but only if one has a small exposure. I wouldn't be betting the stables on this interesting "temporary" market. My attutuide has strongly changed towards the AA accounts as others on this board have pointed out. The shift from a locked in product whose capital had no valuation point to one that is now dynamically moving just didn't sit right with me. Do I have a better soultion though, no I don't I really don't!  |
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knows what he’s buying but it’s not what was marketed 12 months ago. Irrespective good luck to all.