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Post by Badly Drawn Stickman on Feb 2, 2021 8:13:43 GMT
Ate most people trying to leave AC altogether or just reducing balance to a more comfortable level? That's quite a deterrent. Is it legal?
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mogish
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Post by mogish on Feb 2, 2021 8:16:16 GMT
Haha too early to type on a mobile!!
ARE is more appropriate.
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Post by Badly Drawn Stickman on Feb 2, 2021 8:20:49 GMT
Haha too early to type on a mobile!! ARE is more appropriate. We have all done it, it was just a little too tempting to pass up.
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mogish
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Post by mogish on Feb 2, 2021 8:23:36 GMT
Excuse me, just breakfasting on an AC investors leg.....
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Post by oppsididitagain on Feb 2, 2021 9:15:21 GMT
Ate most people trying to leave AC altogether or just reducing balance to a more comfortable level? not at all, Im investing at the discount rates. Got 10K waiting to invest from 0.4 upto 0.8% Naturally I think there will be people sitting in the withdrawal queue just infront of par, but any bigger discount around 0.5 I think that should attract investments. AC did state in the last E mail they hope to do biggest fund releases - 10% of capital - in AA soon, but who knows what the future holds. Slightly off topic,but relative, RS confirmed its sale of loans to Metrobank today, so all invested money will be released free of charge in April. So P2P s slowly turning itself around. I think
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ashtondav
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Post by ashtondav on Feb 2, 2021 9:33:30 GMT
Yes, the majority are not exiting. I’ve got a patient 10k waiting for 0.8%. If it doesn’t get there by month end, I’ll split between loanpad and Proplend, as I ought to diversify even though I like the AC product.
Please start AA lending again AC!
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dead-money
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Post by dead-money on Feb 2, 2021 12:56:45 GMT
As this is on a QAA thread I assume the leaving question is aimed at Access Account holders. Presumably significant Access Account holders don’t typically invest significantly in MLA. In the other direction I assume MLA account holders with Access Account holding are there from when “swept funds” turned into “landfill”. I’d classify myself solely as an MLA investor and have for the last year continued to add funds on a rolling basis month to month. That has plateaued now and most likely could quickly reverse simply because of a lack of attractive available loans with neither existing loan availability (regardless of diversification) nor anything new (regardless of attractiveness) and many existing better loans redeeming. The issue for both AA and MLA holders is the diminishing pool of loans, more and more of which are bad or will go bad. All the good ones have jumped to CBILS or will repay.
I had significant holdings in both AA and MLA, AA accounts are now a tenth of my Jan 2020 holding, MLA is a quarter. Neither will increase until new retail lending starts.
The AC money released has gone to my stock broker. I also have way too much cash sitting in savings accounts earning diddly squat; but still not tempted by P2P currently.
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mogish
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Post by mogish on Feb 2, 2021 13:50:20 GMT
As this is on a QAA thread I assume the leaving question is aimed at Access Account holders. Presumably significant Access Account holders don’t typically invest significantly in MLA. In the other direction I assume MLA account holders with Access Account holding are there from when “swept funds” turned into “landfill”. I’d classify myself solely as an MLA investor and have for the last year continued to add funds on a rolling basis month to month. That has plateaued now and most likely could quickly reverse simply because of a lack of attractive available loans with neither existing loan availability (regardless of diversification) nor anything new (regardless of attractiveness) and many existing better loans redeeming. The issue for both AA and MLA holders is the diminishing pool of loans, more and more of which are bad or will go bad. All the good ones have jumped to CBILS or will repay.
I had significant holdings in both AA and MLA, AA accounts are now a tenth of my Jan 2020 holding, MLA is a quarter. Neither will increase until new retail lending starts.
The AC money released has gone to my stock broker. I also have way too much cash sitting in savings accounts earning diddly squat; but still not tempted by P2P currently.
This answers my earlier post, potential for poorer quality loans left, investors waiting on fresh loans being introduced or reducing risk by spreading investment elsewhere. Its tempting to bung it all in stocks but market is at a high, tempting to go back to p2p but reminded that 2020 has highlighted how risky p2p can be. Personally I'm just reducing my AC holding to a level I feel better at.
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ashtondav
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Post by ashtondav on Feb 2, 2021 15:08:39 GMT
If that is the case are AC being duplicitous in allowing reinvestment into what is guaranteed to become a deteriorating product. Also, if that is the case I would expect discounts to be gradually moving higher and higher reflecting the increased deterioration of the loan book and increased bad debt?
Some time back someone posted their calculation of the appropriate discount rate and Stuart - who at the time had the decency, common sense and business acumen to communicate with his paymasters and customers, actually challenged some of the assumptions
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dead-money
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Post by dead-money on Feb 2, 2021 15:16:54 GMT
If that is the case are AC being duplicitous in allowing reinvestment into what is guaranteed to become a deteriorating product. Also, if that is the case I would expect discounts to be gradually moving higher and higher reflecting the increased deterioration of the loan book and increased bad debt? Some time back someone posted their calculation of the appropriate discount rate and Stuart - who at the time had the decency, common sense and business acumen to communicate with his paymasters and customers, actually challenged some of the assumptions You can do the maths and calculate how much cash is in the AAs, AC periodically update their website with the Provision Fund numbers and amount of ring-fenced cash.
They have previously stated there's enough cash to cover future tranches and known deliquents, but any further deteriation in the loan book or capital write downs of existing defaults will require further cash to be ring-fenced. Question is where's that coming from? (Diverted from capital repayments I'd guess)
NB Did others receive the email noting that 30D and 90D interest had to be covered partially from the provision fund for November? So maybe making more people exit the notice accounts with a 'bug fix' is intentional? (Expect an interest rate drop soon)
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dead-money
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Post by dead-money on Feb 2, 2021 16:46:26 GMT
Ah, yes, I'd forgotten about the non-zero chance of loans in Access accounts becoming untradeable. Thanks.
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Post by Ton ⓉⓞⓃ on Feb 2, 2021 18:40:17 GMT
You can do the maths and calculate how much cash is in the AAs, AC periodically update their website with the Provision Fund numbers and amount of ring-fenced cash. They have previously stated there's enough cash to cover future tranches and known deliquents, but any further deteriation in the loan book or capital write downs of existing defaults will require further cash to be ring-fenced. Question is where's that coming from? (Diverted from capital repayments I'd guess)
NB Did others received the email noting that 30D and 90D interest had to be covered partially from the provision fund for November? So maybe making more people exit the notice accounts with a 'bug fix' is intentional? (Expect an interest rate drop soon) Unfortunately anything’s possible with AC but I don’t think simply diverting capital repayments would constitute capital loss provision funding. Think about it. You’d be imposing a capital hit on lenders to protect them from a capital hit from a future write off. It’s circular. You’d be moving a future potential capital hit to a current capital hit. Bizarre concept, impossible to “account for” in the IT system I’d imagine and certainly odd to reflect from an accounting perspective. AC have already highlighted what would happen if provision funds weren’t able to cover a capital valuation reduction. Namely there’d be non-tradeable event, presumably just on the loans no longer fully covered by ring fenced amounts. The only place provision funds can conventionally come from is interest collected but not paid out. I saw the email about dipping into provision funds to cover the headline AA rates. Which just confirms that provision funds have been underfunded for periods recently. I recently computed that the money weighted headline annualised interest receivable from borrowers for lenders on the AAs is 6%. If I ignore the loans in default it reduces to 5%. Whilst some loans in default will be still paying interest there are others that are not categorised as default that aren’t paying interest currently. So the 5% is a reasonable computation of interest collected. Taking off 0.9% lender fee leaves 4.1% available to distribute to AA holders. With the weighted interest due to lenders on the three AAs amounting to 4% there is little margin for slippage. Thus I’m not at all surprised by the email highlighting the dip into the provision fund to meet monthly interest in recent months. Going forward before there’s any drop in rates and before there’s a capital valuation event ceasing trading, AA holders provision funds will start to get the return of lender fees funds that will eventually run at 0.9% pa. Will that be enough to compensate for - any provision fund underfunding pre March 2020 - any provision fund raiding pre March 2020 - any provision fund underfunding March 2020 to April 2021 - any provision fund raiding March 2020 to April 2021 - any ongoing deterioration of troubled parts of the loanbook post April 2021 - any ongoing shrinkage of the quality parts of the loanbook until such time if it arrives of an improving loanbook though new good quality loans? Each to their own views on the attractiveness of the Access Accounts. I have a trivial amount in AAs and will not cry if I lose some of it or if liquidity deteriorates further. [PS A positive for AA holders is that there’s a built up amount of interest accruing but not paid on loans that will redeem all capital and accrued interest eventually. How big that accruing sum is I don’t know. It’s a positive but no idea if it’s a needle changing amount]
Thought provoking post, can you just talk me through the bit I've emboldened above, I can quite see why this is subtracted?
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Post by df on Feb 2, 2021 21:28:19 GMT
Ate most people trying to leave AC altogether or just reducing balance to a more comfortable level? I've already reduced my balance to a comfortable level, so my recent 10% AA payout went back into MLA and AA. 40% went to expand my MLA portfolio (many loans I've never invested in due to lower rates) and 60% into 30-day @ 0.2 discount.
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alender
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Post by alender on Feb 2, 2021 23:50:17 GMT
Ton ⓉⓞⓃ For the AAs, pre COVID March 2020 we had B% = oldL% + PF% + AC% What the borrower pays and is collected B% was equal to what Access Account holders oldL% got paid out plus what AC got as their monitoring fee with the difference being added to the provision fund PF% when it was positive which presumably it always was. Since March 2020 we have had the introduction of a lender fee of 0.9% pa LFee% paid by lenders to AC and deducted from Access account lender interest notionally leaving a newL% the reduced rates on the Access accounts. B% = newL% + Lfee% (0.9%) + PF% + AC% Hence PF% = B% - AC% - newL% - 0.9%. As I have long suspected from my AA loanbook computations PF% has been flirting with 0% and the recent email from AC confirmed there was a period recently when it went negative. That is what was collected wasn’t enough to cover AA payouts, AC fees and the lender fee paid to AC. In that event the shortfall was taken from the provision fund. So for AAs AC during lockdown have increased their fee by adding the lender fee taking this from the lenders interest rate and from PF contributions while cutting interest rates for lenders on the same loans which are on the same interest rate before the lockdown.
Also I have had said before the lender fee is not 0.9% APR as it is taken in monthly instalments it about 0.93% APR for 4% which is 30D.
Now there has been a larger distribution of cash to the lenders this means the same interest is being collected on lower total funds as non interest earning cash in the AAs has been reduced, this will allow AC to increase the interest rate with no costs if they wish. If AC were to pay out all excess funds from the AAs then the interest rate could be increased with no additional costs, in fact if this was to happen it would go a long way to restoring or perhaps achieving access to the the Access Accounts.
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ian
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Post by ian on Feb 3, 2021 6:20:44 GMT
Ton ⓉⓞⓃ For the AAs, pre COVID March 2020 we had B% = oldL% + PF% + AC% What the borrower pays and is collected B% was equal to what Access Account holders oldL% got paid out plus what AC got as their monitoring fee with the difference being added to the provision fund PF% when it was positive which presumably it always was. Since March 2020 we have had the introduction of a lender fee of 0.9% pa LFee% paid by lenders to AC and deducted from Access account lender interest notionally leaving a newL% the reduced rates on the Access accounts. B% = newL% + Lfee% (0.9%) + PF% + AC% Hence PF% = B% - AC% - newL% - 0.9%. As I have long suspected from my AA loanbook computations PF% has been flirting with 0% and the recent email from AC confirmed there was a period recently when it went negative. That is what was collected wasn’t enough to cover AA payouts, AC fees and the lender fee paid to AC. In that event the shortfall was taken from the provision fund. So for AAs AC during lockdown have increased their fee by adding the lender fee taking this from the lenders interest rate and from PF contributions while cutting interest rates for lenders on the same loans which are on the same interest rate before the lockdown.
Also I have had said before the lender fee is not 0.9% APR as it is taken in monthly instalments it about 0.93% APR for 4% which is 30D.
Now there has been a larger distribution of cash to the lenders this means the same interest is being collected on lower total funds as non interest earning cash in the AAs has been reduced, this will allow AC to increase the interest rate with no costs if they wish. If AC were to pay out all excess funds from the AAs then the interest rate could be increased with no additional costs, in fact if this was to happen it would go a long way to restoring or perhaps achieving access to the the Access Accounts.
The way I see it another £20m payout will cost AC approx £8m in cash; 50% plus appears to be reinvested. Additionally a public announcement of a one off transfer of circa £4m to the provision fund, along with a return to former interest levels on all funds not in withdrawal on the 90 / 30 day account; would result in the end of the secondary market, normalisation, and the start of new retail investment and new lending. AC still would need to get some proper valuers on their books though ! The cost of interest hike as Alender says could be funded from cash reduction along with continued purchase by the AAs of performing GBBA loans.
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