dead-money
Rocket to the Moon
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Post by dead-money on Dec 7, 2020 14:17:48 GMT
>> In my MLA I’ve got three loans with non-trivial amounts invested that are in default. One has a capital valuation of 100% and the other two circa 80%, thus implying no loss and 20% losses respectively. I think for now based on published information those look reasonable assessments. For the AAs book whilst 8.1% is defaulted the capital valuation is 97.7%. Implying a capital loss of 2.3%, but that should be all covered by ring fenced provision funding. So simplistically there should be no discount. However, the capital valuations aren’t static and it’s fair to project some deterioration. The provision fund is nearly maxed out after known ring fencing so has limited headroom to absorb much further deterioration in capital valuations. But discounts are currently at circa 3.4% implying losses of 3.4% in excess of the current provision ring fencing of known capital valuation reductions. Is that a FAIR assessment of the future outcomes? << Sadly those capital valuations have a habit of declining rapidly once the receivers / administrators get involved and a fire sale ensues. Take a look at #824 !
I'd expect #548, #753 & #528 to follow a similar trajectory.
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dead-money
Rocket to the Moon
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Post by dead-money on Dec 7, 2020 15:42:19 GMT
dead-money I certainly have some awareness of #824 as the largest drain on the ring fenced provision. In fact it single handedly makes up a quarter of the ring fenced provision. #548 and #753 come in at 2nd and 3rd with #528 at 10th. If those three all deteriorate to the same capital valuations as #824 then the book capital valuation of the whole AAs book would shift from 97.7 to 95.8. At an estimate the provision fund can cope with about 97.3 which would leave a shortfall of 1.5. Half that shortfall is approximately due to the lender fee and the other half is no doubt pre Covid underfunding. At guess was there an I** “raid” on the provision fund. Without a quick return to removing the lender fee and topping up the provision fund by a minimum additional 0.75% per annum the current 3.4% discount is probably fair to good value (for sellers). As I’ve said I’ve been prepared to sell at discounts from 6.1% to 3.5% and will continue to run my trivial AA amounts down further. Deees Yes, it seems we are in agreement on the possible real value of the Access accounts, it's just others that seem intent on holding on to some irrational hope that par withdrawals should happen / could happen / will happen.
My own AA holdings have been reduced substantially, but remain non-trivial.
Those who have refused the opportunity to exit over the last few months should have no cause for compliant when their funds become locked in to untradeable loans and suffer substantial capital losses, but we know they will.
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alanh
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Post by alanh on Dec 7, 2020 16:31:23 GMT
dead-money I certainly have some awareness of #824 as the largest drain on the ring fenced provision. In fact it single handedly makes up a quarter of the ring fenced provision. #548 and #753 come in at 2nd and 3rd with #528 at 10th. If those three all deteriorate to the same capital valuations as #824 then the book capital valuation of the whole AAs book would shift from 97.7 to 95.8. At an estimate the provision fund can cope with about 97.3 which would leave a shortfall of 1.5. Half that shortfall is approximately due to the lender fee and the other half is no doubt pre Covid underfunding. At guess was there an ILI “raid” on the provision fund. Without a quick return to removing the lender fee and topping up the provision fund by a minimum additional 0.75% per annum the current 3.4% discount is probably fair to good value (for sellers). As I’ve said I’ve been prepared to sell at discounts from 6.1% to 3.5% and will continue to run my trivial AA amounts down further. Deees Yes, it seems we are in agreement on the possible real value of the Access accounts, it's just others that seem intent on holding on to some irrational hope that par withdrawals should happen / could happen / will happen.
My own AA holdings have been reduced substantially, but remain non-trivial.
Those who have refused the opportunity to exit over the last few months should have no cause for compliant when their funds become locked in to untradeable loans and suffer substantial capital losses, but we know they will.
This is exactly right and something I do not understand. This platform is now being run purely for the benefit of AC itself. As the risks to lenders keep escalating there seems to be no upside whatsoever in hanging on waiting for the final few percent - sell on the SM at a 3 or 4% loss and put the whole thing behind you. Investors in other failed platforms like Col, Lendy and FS are facing huge capital losses and years of waiting to get anything - is it really worth the risk hanging on to try and get your money out at par?
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iRobot
Member of DD Central
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Post by iRobot on Dec 7, 2020 18:15:08 GMT
This: Does that £200m include the monies set aside to fund future dev loan tranches and thus protect all lenders? My observation from the Q&A was that there is now sufficient funding ringfenced to cover all forecast dev loan requirements and, as such, AC can now "consider" increasing repayments to those wishing to withdraw. I suspect it isn't possible to substantively confirm the %-value of redemptions repaid to those wishing to withdraw, but I will be looking to see if the £-value does increase over the coming months (re-basing for the capital redeemed). This: don't forget that there's no guarantee of a 'full return' over any timescale; these are - and always were - risky investments and capital is at risk 'irrespective of market conditions'. This: just a silly thought along the lines of 'captive capital' and new investors; maybe it's those new investors who are holding your capital 'hostage' and will release it for a ~3.5% ransom with the SM acting as 'hostage negotiator'  Your correct there is no guarantee however AC tell us they have got this risk covered by the provision fund ??I don’t think this is silly at all - we have a Director of the company effectively stating they are not prepared to consider reducing their capital base. What is ridiculous is AC are advertising a 30 day account that they have no intention of allowing investors to redeem funds deposited within that timescale.Irrespective Investor Trust has completely gone. They should commit to redeeming investors capital within a reasonable timescale; that may be from institutional investors or Stuart’s brother who could possibly pay out the “minority of investors” himself !he wording is clear: " investors should not rely on possible pay-outs from the Provision Funds". I'd hope that the PF would be sufficient to cover Access accounts and my expectation is that, if/when deployed, the PF would fully cover the lowest interest bearing accounts first; but I'm under no illusion that the PF is a guarantee. This: My apologies. What I wrote was ambiguous and I didn't mean to imply the comment I was referring to was 'silly' but rather that my premise of new investors holding would-be withdrawers' capital hostage, etc was a silly, whimsical one. This: My opinion: given the degree of warning present, anyone signing up to a 30 day account expecting to " redeem funds deposited within that timescale", shouldn't be left in charge of their own finances. This: Is that fact? Or your opinion? If the latter, you are of course entitled to hold that opinion but, as others have also queried, if you are so greatly concerned by AC's prospects and / or in such dire need of your funds why on earth haven't you utilised the SM to sell out? Even at a 5% discount, isn't that a better outcome that you currently envisage? What are your expectations if you don't use the SM?
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