dead-money
Rocket to the Moon
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Post by dead-money on Jan 1, 2021 9:54:05 GMT
Got rid of a few thousand quid @ 1.2% Yep, thank you passive interest reinvestors. 1.1% / 1.2% at 00:30 01/01/21
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ian
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Post by ian on Jan 1, 2021 10:11:28 GMT
Yes I would imagine a realistic 0.5% penalty for withdrawal will be the order of the day in February... I also note that there is increased automated sales from the GBBA which is all good for everyone’s liquidity
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rscal
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Post by rscal on Jan 1, 2021 11:34:45 GMT
Yes I would imagine a realistic 0.5% penalty for withdrawal will be the order of the day in February... I also note that there is increased automated sales from the GBBA which is all good for everyone’s liquidity What do you mean by 'automated' and how can you see this?
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ian
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Post by ian on Jan 1, 2021 15:45:34 GMT
Yes I would imagine a realistic 0.5% penalty for withdrawal will be the order of the day in February... I also note that there is increased automated sales from the GBBA which is all good for everyone’s liquidity What do you mean by 'automated' and how can you see this? Sale of loan parts in the GBBA are beyond the control of investors - it is my belief AC sells loan parts paying 6.25% interest to investors and buys them in the access accounts paying investors 4%. The GBBA investors can cash out however if you wish to remain invested, this is effectively swap into the same loan at a lower interest rate.
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Jan 1, 2021 16:13:40 GMT
What do you mean by 'automated' and how can you see this? Sale of loan parts in the GBBA are beyond the control of investors - it is my belief AC sells loan parts paying 6.25% interest to investors and buys them in the access accounts paying investors 4%. The GBBA investors can cash out however if you wish to remain invested, this is effectively swap into the same loan at a lower interest rate. It could equally be selling those loan parts to investors at 9% if the investor elects to remain invested via the MLIA. Of course it isnt a swap into the same loan at a lower rate, its a swap into a basket of loans at a lower rate (with the added PF which benefits from the margin differential). The actual amount that goes into the same loan will be a fraction of that that came out.
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Post by Harland Kearney on Jan 1, 2021 16:52:39 GMT
Just bought £43 for 1.1% ... Looks like we gonna get into sub 1% as I suspected. We are still a long way from true PAR selling though.If you personally define it so. But we are about 90% closer than at the darkest, deepest, discount moment when it was touching circa 10%. I mean in the sense of the AA accounts proving true access on demand within the stated time frames. I find it hard to believe that once we hit 0 (if we did) that you wouldn't have a largish queue in front also trying to exit, since alot of investors are already taking repayments at PAR and investing at the discounts. I will be interested to see how this is dealt with, maybe the large sum of cash in holding is partially a answer to this question?
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dead-money
Rocket to the Moon
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Post by dead-money on Jan 1, 2021 19:44:02 GMT
Sale of loan parts in the GBBA are beyond the control of investors - it is my belief AC sells loan parts paying 6.25% interest to investors and buys them in the access accounts paying investors 4%. The GBBA investors can cash out however if you wish to remain invested, this is effectively swap into the same loan at a lower interest rate. It could equally be selling those loan parts to investors at 9% if the investor elects to remain invested via the MLIA. Of course it isnt a swap into the same loan at a lower rate, its a swap into a basket of loans at a lower rate (with the added PF which benefits from the margin differential). The actual amount that goes into the same loan will be a fraction of that that came out. The majority of PSA, GBBA / GBBA2 loans are in default and suspended, so it won't be MLA buying them up, can only be the AAs, if at all. In fact on reflection I think all those defaulted loans are probably stuck until AC deigns to activate the provision funds.
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dead-money
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Post by dead-money on Jan 1, 2021 19:47:53 GMT
I mean in the sense of the AA accounts proving true access on demand within the stated time frames. I find it hard to believe that once we hit 0 (if we did) that you wouldn't have a largish queue in front also trying to exit, since alot of investors are already taking repayments at PAR and investing at the discounts. I will be interested to see how this is dealt with, maybe the large sum of cash in holding is partially a answer to this question? Given how difficult it is to predict AC’s logic I have no certainty on what AC might or might not implement. But one thing I’m certain of is that the AC accounts will never be the same as pre-Covid. That genie is out of the bottle. My primary interest in the AAs is how they interact or don’t interact with the MLA and what AC strategy that implies for the MLA. The investment criteria for the AA accounts is listed on AC's website, so if you only ever invest via the MLA in loans which are held by the AAs then you at least have a ready buyer on hand! Even better narrow it down to property development loans with a CBILS tranche in place; that's the future direction of AC, IMHO.
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Jan 1, 2021 19:58:36 GMT
It could equally be selling those loan parts to investors at 9% if the investor elects to remain invested via the MLIA. Of course it isnt a swap into the same loan at a lower rate, its a swap into a basket of loans at a lower rate (with the added PF which benefits from the margin differential). The actual amount that goes into the same loan will be a fraction of that that came out. The majority of PSA, GBBA / GBBA2 loans are in default and suspended, so it won't be MLA buying them up, can only be the AAs, if at all. In fact on reflection I think all those defaulted loans are probably stuck until AC deigns to activate the provision funds. Are the accounts actually selling suspended loans? I had a quick look at a GBBA account today belonging to a relative & IIRC all the transactions related to provision fund payments. Might have missed something but I didnt see anything in the way of sales of defaults.
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Jan 1, 2021 20:12:22 GMT
Given how difficult it is to predict AC’s logic I have no certainty on what AC might or might not implement. But one thing I’m certain of is that the AC accounts will never be the same as pre-Covid. That genie is out of the bottle. My primary interest in the AAs is how they interact or don’t interact with the MLA and what AC strategy that implies for the MLA. The investment criteria for the AA accounts is listed on AC's website, so if you only ever invest via the MLA in loans which are held by the AAs then you at least have a ready buyer on hand! Even better narrow it down to property development loans with a CBILS tranche in place; that's the future direction of AC, IMHO. The investment criteria is basically any loan on the platform so if you invest in any loan through the MLIA its eligible for the AA. I think its a dangerous assumption to assume that the AA are significant buyers in normal times, they are predominantly sellers, if not exclusively. As the lender of first resort on all loans & tranches they is no real need for them to rebalance by buying on the market when it can be done by managing the flow of loans onto the market. As lower rate loans tend to be smaller it is easier to boost income by retaining more of higher rate loans than by buying on the market, particularly as the lower rate loans tend to be amortising SME loans and the higher rate non-amortising tranched (so regular top-ups) development loans
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dead-money
Rocket to the Moon
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Post by dead-money on Jan 1, 2021 20:48:33 GMT
The majority of PSA, GBBA / GBBA2 loans are in default and suspended, so it won't be MLA buying them up, can only be the AAs, if at all. In fact on reflection I think all those defaulted loans are probably stuck until AC deigns to activate the provision funds. Are the accounts actually selling suspended loans? I had a quick look at a GBBA account today belonging to a relative & IIRC all the transactions related to provision fund payments. Might have missed something but I didnt see anything in the way of sales of defaults. No as per second sentence, I think we are all stuck with our own particular set of unsaleable zombie loans. Also the provision funds are too small, not growing and won't cover likely losses.
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dead-money
Rocket to the Moon
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Post by dead-money on Jan 1, 2021 20:55:44 GMT
The investment criteria for the AA accounts is listed on AC's website, so if you only ever invest via the MLA in loans which are held by the AAs then you at least have a ready buyer on hand! Even better narrow it down to property development loans with a CBILS tranche in place; that's the future direction of AC, IMHO. The investment criteria is basically any loan on the platform so if you invest in any loan through the MLIA its eligible for the AA. I think its a dangerous assumption to assume that the AA are significant buyers in normal times, they are predominantly sellers, if not exclusively. As the lender of first resort on all loans & tranches they is no real need for them to rebalance by buying on the market when it can be done by managing the flow of loans onto the market. As lower rate loans tend to be smaller it is easier to boost income by retaining more of higher rate loans than by buying on the market, particularly as the lower rate loans tend to be amortising SME loans and the higher rate non-amortising tranched (so regular top-ups) development loans Well, at the moment the new normal, is no new loan issues, so the AA is presumably a net buyer rather than seller? Allegedly they have sufficient cash for future non-CBILS tranches plus ring-fenced deliquents, so any surplus funds should be buying off MLA holders?
From personal experience, I'm struggling to buy any medium/low risk, lower rate development loans, as zero availability, whilst also struggling to sell, medium/high risk, higher rate development loans, which have large amounts available. So maybe AA is favouring lower risk loans over excess returns? Or there's just very few buyers or seller of anything...
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rscal
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Post by rscal on Jan 2, 2021 8:17:35 GMT
Can someone please enlighten me on how the defunct 'investment accounts' [PSA & GBBA] are supposed to be operating? In olden times they would rebalance holding wouldn't they? But now they are supposed to be in runoff so there would be no rebalancing and the default return of capital to holders of the accounts should be [as showing in our statements] a trickle of scheduled principal payments and actual redemptions of the individual 'highlighted'* loan
[*that is, - amounts no longer subject to rebalance ]
Thnx
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dead-money
Rocket to the Moon
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Post by dead-money on Jan 2, 2021 9:15:19 GMT
Can someone please enlighten me on how the defunct 'investment accounts' [PSA & GBBA] are supposed to be operating? In olden times they would rebalance holding wouldn't they? But now they are supposed to be in runoff so there would be no rebalancing and the default return of capital to holders of the accounts should be [as showing in our statements] a trickle of scheduled principal payments and actual redemptions of the individual 'highlighted'* loan
[*that is, - amounts no longer subject to rebalance ]
Thnx
Your understanding is correct. stuck in suspended and defaulted loans, waiting for receivers / administrators / provision fund to payout years down the line, or healthy loans looking for buyers from MLA / AA , whilst receiving a trickle of interest and principal payments. No rebalancing.
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Jan 2, 2021 11:18:58 GMT
From personal experience, I'm struggling to buy any medium/low risk, lower rate development loans, as zero availability, whilst also struggling to sell, medium/high risk, higher rate development loans, which have large amounts available. So maybe AA is favouring lower risk loans over excess returns? Or there's just very few buyers or seller of anything...
Odd. There are only 5 (out of 22) medium risk (lower risk dont exist) development loans without availability currently - Im generally able to pick up bits. #1167 medium, 6% (the lowest rate dev loan) has 60% available. Of course one issue is whether the risk is reflected in the numbers displayed. #1118 is a case in point, 6.5% medium high 70%LTV in reality sub 10%. The AA took all of the last tranche and hasnt released any back on to the market
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