macq
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Post by macq on Aug 3, 2021 22:16:46 GMT
while i realise this is all a guess at the moment and is probably wrong and not whats being considered - some random thoughts anyway
1. I don't see how it would be legal/ethical to have a form of stoozing where a p2p platform allows a loan so the borrower can then buy bonds. 2.So if the borrower has the bonds in the first place (and i assume there not bought a day before the loan ) why would they not sell the bonds rather then pay the interest on a loan and also have the risk of the bonds crashing.One only has to look at some of the bonds offered by high street chains like New Look etc to see the potential for even what starts as a higher rated bond to drop to near zero pretty quick 3.while it might be easier to track a boat or have a charge on a property it would seem pretty easy to make a bond disappear with One click 4.There are already Investment trusts with higher risk bonds in that 5% to 8% yield range but with a longer track record (some good some bad) so this would not stand out
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blender
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Post by blender on Aug 4, 2021 7:40:44 GMT
With this lack of knowledge about the offering it is very hard to respond to ablrate's request for views - unless it is simply a question of whether 8% interest is enough to attract funds on this platform. I guess many of us have funds elsewhere at rates lower than that secured on real property. So my answer has to be that it's not so much the rate, it's the balance of rate and risk, and there is no minimum rate for this platform - as long as we get the best part of the borrower payments. If ablrate take 4% and an up-front fee, then maybe the security will not look good enough for our 8%.
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hazellend
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Post by hazellend on Aug 4, 2021 8:14:52 GMT
With this lack of knowledge about the offering it is very hard to respond to ablrate's request for views - unless it is simply a question of whether 8% interest is enough to attract funds on this platform. I guess many of us have funds elsewhere at rates lower than that secured on real property. So my answer has to be that it's not so much the rate, it's the balance of rate and risk, and there is no minimum rate for this platform - as long as we get the best part of the borrower payments. If ablrate take 4% and an up-front fee, then maybe the security will not look good enough for our 8%. Exactly. If the 50% LTV was backed with high quality residential property first charge then 8% is acceptable.
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Jaydee
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Post by Jaydee on Aug 4, 2021 8:28:34 GMT
There are very very few good grade Bonds that offer anything above 5% on the market at present. Many companies with Bonds already issued are now issuing further bonds at a lower level of return in order to redeem the higher rate bonds and IMO this is likely to increase as low interest rates continue and the economy picks up. If you are interested in the bond lending market check out WiseAlpha where you will see a very wide range of bonds with comparative interest rates. This is NOT any type of financial advice or an endorsement of WA.
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corto
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Post by corto on Aug 4, 2021 8:29:33 GMT
Not a fan of borrowing to invest; if that's the idea I'd be hesitant
On the other hand, securing a loan (for something else than investing) by bonds may not be a bad idea. It could be good quality bonds, we don't know. Those provide an income for the borrower which does not hold for all loan security types. If they are liquid, they could also be sold quickly, should the borrower run into trouble.
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macq
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Post by macq on Aug 4, 2021 10:49:08 GMT
Not a fan of borrowing to invest; if that's the idea I'd be hesitant On the other hand, securing a loan (for something else than investing) by bonds may not be a bad idea. It could be good quality bonds, we don't know. Those provide an income for the borrower which does not hold for all loan security types. If they are liquid, they could also be sold quickly, should the borrower run into trouble. i know this is all hypothetical but i would agree with the first line - but without doing a search on something that will probably not happen i do wonder if you can use bonds/funds/shares as collateral and how legally you would be able to have a charge (or joint name holding) on them.I have never read of the idea of going to a bank and saying i would like to put my holding in say Scottish Mortgage as an example against a loan,but i guess it might be done But if there was no way of making an iron clad arrangement then the idea in the last line might be a bit worrisome
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eeyore
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Post by eeyore on Aug 4, 2021 11:10:50 GMT
"But if there was no way of making an iron clad arrangement then the idea in the last line might be a bit worrisome."
But if there was no way of making an iron clad arrangement then ....... I'd walk away!
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Post by Badly Drawn Stickman on Aug 4, 2021 11:12:23 GMT
There must be two versions of the update video (link just went to a version that would not run, so I found it in Youtube). The one I am watching does not mention bonds or 8%. I have just re-watched and all I hear is wonderous new product that solves all P2P problems, quick skip over the loans telling me nothing, then a comment saying its boring telling us nothing and tell him what we want to hear about instead. Actually I think there was a potential night out offered if I played my cards right (think that one has gone now).
The only place I personally am seeing bonds and 8% is in the thread title.
Written updates should be provided as well.
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blender
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Post by blender on Aug 4, 2021 11:37:53 GMT
There was an email 'Loan book updates' 2 Aug 3:22pm. That's where it came from. I don't know about whether it is in the video - I had a few senior moments and nodded off occasionally.
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Post by Badly Drawn Stickman on Aug 4, 2021 11:52:55 GMT
There was an email 'Loan book updates' 2 Aug 3:22pm. That's where it came from. I don't know about whether it is in the video - I had a few senior moments and nodded off occasionally. Ah right that would be the one I have just located in my deleted email folder and now remember scanning briefly...... Ok as you were.
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brianlom1
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Post by brianlom1 on Aug 4, 2021 12:54:26 GMT
As we know little about what is actually being proposed, let me ask a slightly different question: In what circumstances would we consider investing for an 8% return?
For me, it would all come down to the security offered (and our faith in Ablrate to access the security in the event of default).
Let's also not lose sight of the fact that this is a new borrower (something that many of us have requested).
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dh1
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Post by dh1 on Aug 7, 2021 19:26:09 GMT
Being a little lacking in my understanding of "bonds" and in fact the Ablrate proposal per se, I asked a couple of questions.
It turns out that the borrower (if it turns out to be that) (a) holds the (Listed) bonds (so have bought them) and (b) is/will be seeking money from us lenders in advance of returns expected from the bond holding, secured against the bonds themselves.
If I have this right, the bonds are really a loan to somebody else which pays interest and the capital back, presumably in this case after some delay. The borrower wants that money earlier, hence this proposal.
As mentioned elsewhere in the thread, it seems a bit odd to have the money (the potential Ablrate borrower); give it to somebody else for a future payment (the bond issuer presumably); then ask a third party (Ablrate lenders) to give the potential borrower some cash (?) to tide them over until the bond interest is paid/capital returned.
It has been said that this is a repeatable offering, so it seems to me that the potential Ablrate borrower is simply churning money to keep it earning - all about liquidity.... There's nothing wrong in that from my point of view. The fact that it seems a bit odd doesn't mean the proposal is in any way inappropriate or disproportionately risky.
We do need to be mindful that this is new territory for us Ablrate lenders and that it will be important to carefully check the solidity of both the borrower and the security being offered.
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Post by overthehill on Aug 7, 2021 20:18:45 GMT
I haven't seen the proposal and I don't invest in bonds. The borrower may not want to sell the bonds right now because their value has dropped significantly since he bought them. That doesn't matter if you keep the bonds until maturity - hoping they don't default between now and then. If their value has dropped significantly it is because selling outstrips buying - just like shares. The reasons behind that make the bonds riskier as a security.
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macq
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Post by macq on Aug 7, 2021 22:09:16 GMT
I haven't seen the proposal and I don't invest in bonds. The borrower may not want to sell the bonds right now because their value has dropped significantly since he bought them. That doesn't matter if you keep the bonds until maturity - hoping they don't default between now and then. If their value has dropped significantly it is because selling outstrips buying - just like shares. The reasons behind that make the bonds riskier as a security. I know Barclays on there wealth management side (as well as others) offer the service so would guess you need to be of a HNW -so why you would go the way of p2p rather then a bank i am not sure.But Barclays do say they monitor the portfolio and if the value drops or the exposure increases etc they may ask for more security or force a sale. So its not a simple process and just seems to add another layer of complexity for the individual lender/investor While it might make sense for a bank or platform to lend against an asset and collect the interest/fees etc it does not make sense to me as an investor as i can just go to the bond/fund/share myself and collect the dividends and hopefully growth- rather then have the worry of the borrowers asset dropping or them being unable to pay for another reason
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