beagle
Investor in ratesetter, funding circle, lendy (lesson learnt) and AC
Posts: 670
Likes: 322
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Post by beagle on Sept 30, 2020 19:23:12 GMT
Ratesetter when are you going to announce the incredibly obvious interest haircut extension. Given it is our investment it is right and fair that you update us properly now as clearly the interest ratio is never going to reach 100% with your current measures.
I appreciate we need to discount economic forecast and less loans under ratesetter. However, based on current underwriting and forecasts you should clearly know the ratio won't reach 100%. It is time to be straight and extend or cut deeper as capital is at risk and with 970K I would appreciate a more serious update on this.
Your investor team and management took an earful and it was clear they were not sure. The 'head of' tried as always his best too but I would like to publicly ask, as Furlough comes an end in 1 month the risk is increasing. What step will you take.
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Post by james91 on Sept 30, 2020 20:28:23 GMT
Unless their economic forecasts are far too optimistic, then why is a haircut needed at this stage? Unless I've completely misunderstood how this works, the current 69% interest coverage ratio is based on interest rates before the cut. Given we've had a reduction of 50%, does this not mean we have a ratio of 138% at current interest rates (50%)?
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sl75
Posts: 2,092 
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Post by sl75 on Sept 30, 2020 20:55:51 GMT
Unless their economic forecasts are far too optimistic, then why is a haircut needed at this stage? Unless I've completely misunderstood how this works, the current 69% interest coverage ratio is based on interest rates before the cut. Given we've had a reduction of 50%, does this not mean we have a ratio of 138% at current interest rates (50%)? I think the point is that at present it looks unlikely to reach 100% coverage by 31 December when the temporary reduction is scheduled to end. The latest RateSetter info shows the coverage having improved from 67% to 69% during one month, despite having half of the interest that would normally be due to lenders diverted.
However, given that many loans are likely to repay (in full or in part) within the next 3 months, there's still scope for the situation to look very different by December when a final decision would need to be made.
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Post by james91 on Sept 30, 2020 21:22:28 GMT
Oh sorry I mis-read the original message and thought the OP was arguing for a further cut. I had assumed an extension was inevitable.
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Post by Ace on Sept 30, 2020 22:01:16 GMT
Yes, their insistence that their forecast that the ICR will improve to 100% by the end of the year is still on track does seem to be incredible.
In May, when they cut the interest rates in half, the ICR was 74%. Since then it fell to 67% and has now risen to 69%. Furlough schemes etc are ending and unemployment is forecast to rise sharply. RS believe that this will lead to lower defaults!
It seems more reasonable to assume that the ICR will fall below 50%, forcing further interest cuts as a minimum, than it does to assume it will rise to 100%.
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beagle
Investor in ratesetter, funding circle, lendy (lesson learnt) and AC
Posts: 670
Likes: 322
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Post by beagle on Oct 1, 2020 6:32:57 GMT
Exactly that. They have released over £100 million, a great result, they have continued to lend, a great effort. However, as the book shrinks and their are no 'real' inflows coming in from originations post metro they rely totally on borrowers not defaulting. With the end of furlough a cliff edge approaches they need to be open and make cuts now www.ratesetter.com/invest/statistics . What is especially unfair is given we will not catch up to 100% the lack of information will also hinder those in the 5 year market from deciding on what to do pre 15th Oct. Their head of investor discussed with me, the cash balance increase vs lower loan book, growth rates over May, June, July and capital is still 100% intact. All valid and true but he could not explain how to get from 69% to 100% in 3 months except from stating that it is forecast related and thereby a very fluid number. |
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Post by freefalljunkie on Oct 1, 2020 8:51:40 GMT
The latest provision fund update was actually better than I had feared, but I agree an interest haircut extension is absolutely inevitable now so I wish RS would just openly admit the obvious. However I am still cautiously optimistic that a capital haircut if it comes will be a small one.
Sadly since the loan book is now in run off and Metro Bank is in control I suspect keeping existing investors well informed is slipping down the priority list for RS.
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beagle
Investor in ratesetter, funding circle, lendy (lesson learnt) and AC
Posts: 670
Likes: 322
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Post by beagle on Oct 13, 2020 7:17:07 GMT
The latest provision fund update was actually better than I had feared, but I agree an interest haircut extension is absolutely inevitable now so I wish RS would just openly admit the obvious. However I am still cautiously optimistic that a capital haircut if it comes will be a small one. Sadly since the loan book is now in run off and Metro Bank is in control I suspect keeping existing investors well informed is slipping down the priority list for RS. well they have 10 weeks to cover circa 33%.
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Post by jono75 on Oct 21, 2020 0:20:33 GMT
The latest provision fund update was actually better than I had feared, but I agree an interest haircut extension is absolutely inevitable now so I wish RS would just openly admit the obvious. However I am still cautiously optimistic that a capital haircut if it comes will be a small one. Sadly since the loan book is now in run off and Metro Bank is in control I suspect keeping existing investors well informed is slipping down the priority list for RS. well they have 10 weeks to cover circa 33%. Hate to pour petrol on the fire, but there is a loan I have some money in on the one year market for £1,302,347.30, that is due to pay out today that has defaulted, I wonder how much they will be able to recover of that in the current climate. At least it's not a Lending Works style interest famine yet.
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Post by scepticalinvestor on Oct 21, 2020 9:33:26 GMT
well they have 10 weeks to cover circa 33%. Hate to pour petrol on the fire, but there is a loan I have some money in on the one year market for £1,302,347.30, that is due to pay out today that has defaulted, I wonder how much they will be able to recover of that in the current climate. At least it's not a Lending Works style interest famine yet.
jono75 Hopefully, it's just a "technical" default due to reaching term. Can you tell if it's a property loan?
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Post by gricehead on Oct 21, 2020 10:49:00 GMT
Hate to pour petrol on the fire, but there is a loan I have some money in on the one year market for £1,302,347.30, that is due to pay out today that has defaulted, I wonder how much they will be able to recover of that in the current climate. At least it's not a Lending Works style interest famine yet.
jono75 Hopefully, it's just a "technical" default due to reaching term. Can you tell if it's a property loan? This is/was a property loan and it has paid out today. Details say that it is security backed, and the security has been enforced, but ratesetter does not expect payment in full.
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Post by ruralres66 on Oct 21, 2020 12:21:50 GMT
I too had a RYI on this - 1 Yr 481 yesterday - but it was due on the 12th October but in default. Paid out in full today! Repayment not RYI
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beagle
Investor in ratesetter, funding circle, lendy (lesson learnt) and AC
Posts: 670
Likes: 322
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Post by beagle on Oct 21, 2020 16:00:17 GMT
next week's update will be all the more interesting. although the data is 1 month in arrears hopefully the cash is up given our contributions
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