ilmoro
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'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 Mar 1, 2023 20:15:08 GMT
Its going to be affected by number of non-paying loans in AA. Even though non-paying loans dont pay a fee, because the fee is about half the ave interest rate, then there is a disproportionate effect. Effect will be worse if its higher rate loans that arent paying. Probably also be impact from amount of free cash, loans catching up payments, drawdowns, redemptions.
In a nutshell its complicated and opaque
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blender
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Post by blender on Mar 1, 2023 20:39:12 GMT
I did say it might fall this month. In two months' time they might require us to set up a direct debit to pay the fees. Must be permitted in the T&Cs somewhere - or maybe tomorrow's update.
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Post by bob2010 on Mar 1, 2023 21:06:53 GMT
Its going to be affected by number of non-paying loans in AA. Even though non-paying loans dont pay a fee, because the fee is about half the ave interest rate, then there is a disproportionate effect. Effect will be worse if its higher rate loans that arent paying. Probably also be impact from amount of free cash, loans catching up payments, drawdowns, redemptions. In a nutshell its complicated and opaque But before they entered this 'run off' they were paying the target rate. Why has this suddenly stopped as the loans are still paying the same rate and surely defaults would be similar?
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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 Mar 1, 2023 21:11:05 GMT
Its going to be affected by number of non-paying loans in AA. Even though non-paying loans dont pay a fee, because the fee is about half the ave interest rate, then there is a disproportionate effect. Effect will be worse if its higher rate loans that arent paying. Probably also be impact from amount of free cash, loans catching up payments, drawdowns, redemptions. In a nutshell its complicated and opaque But before they entered this 'run off' they were paying the target rate. Why has this suddenly stopped as the loans are still paying the same rate and surely defaults would be similar? They werent deducting 2.9% pa
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Post by bob2010 on Mar 1, 2023 22:05:50 GMT
But before they entered this 'run off' they were paying the target rate. Why has this suddenly stopped as the loans are still paying the same rate and surely defaults would be similar? They werent deducting 2.9% pa But that 2.9% fee is from the original rate not from the AA target rate. Is 5.3% the average rate of the performing loans (ie. 5.3% less 2.9% gives the 2.4%)? Is there a way to verify this?
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rscal
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Post by rscal on Mar 2, 2023 7:50:28 GMT
They weren't deducting 2.9% pa But that 2.9% fee is from the original rate not from the AA target rate. Is 5.3% the average rate of the performing loans (ie. 5.3% less 2.9% gives the 2.4%)? Is there a way to verify this? Probably one for the really dedicated. if you list 'Marketplace' and sort by 'next payment' then whatever lies in the future 30 days ought to be a performing loan that has paid in the previous month. That brings up 217 [plus 17 within a week so not treated as in late - take 8 of those into account] or thereabouts out of 326. Just as a rough guide '225'/325 = 69%. But while this ratio will vary 'a bi't each month of course it shouldn't vary that much compared (say) to the interval difference I pointed out earlier. Interesting isn't it, how 20dp chess gets you into a Stu by setting up the calculation of fee income to be overly complicated. One suspects the borrowers contracts are equally obscured by invented details and they just shrug their shoulders and pay the ferryman too [We are just so grateful when a solicitor['s assistant] sends us a bill for buying our property so we can take possession we don't even give it much of a though]
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ilmoro
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Post by ilmoro on Mar 2, 2023 10:49:33 GMT
But that 2.9% fee is from the original rate not from the AA target rate. Is 5.3% the average rate of the performing loans (ie. 5.3% less 2.9% gives the 2.4%)? Is there a way to verify this? Probably one for the really dedicated. if you list 'Marketplace' and sort by 'next payment' then whatever lies in the future 30 days ought to be a performing loan that has paid in the previous month. That brings up 217 [plus 17 within a week so not treated as in late - take 8 of those into account] or thereabouts out of 326. Just as a rough guide '225'/325 = 69%. But while this ratio will vary 'a bi't each month of course it shouldn't vary that much compared (say) to the interval difference I pointed out earlier. Interesting isn't it, how 20dp chess gets you into a Stu by setting up the calculation of fee income to be overly complicated. One suspects the borrowers contracts are equally obscured by invented details and they just shrug their shoulders and pay the ferryman too [We are just so grateful when a solicitor['s assistant] sends us a bill for buying our property so we can take possession we don't even give it much of a though] If only 20dp chess was the complicated bit. First you need to use the loan list for just the AA as its only in 285 loans, including not being invested in some performing loans. Unfortunately next payment dates include some which are for extension fees or drawdowns so will exclude some loans that are performing Next what is the exact definition of a loan that is subject to the fee ... it should be a loan that has made an interest payment within the fee period, the 7 day rule shouldnt be relevant, otherwise you will be paying fees on loans that havent contributed to the pot. What about loans with partial interest payments? Pro rata fee? Then you have to factor in loans that have made catch up payments in a month even if they are still in arrears How do treat loans with drawdowns during a month? What holding is the fee calculated against? Same with redemptions. As for the average rate, its about 6.2% but what you actually need is the weighted average as more of the loan book is invested in loans paying less than the average.
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Post by bob2010 on Mar 2, 2023 11:30:03 GMT
So I decided to put it to them via chat (as they won't talk to me over the phone). As expected they won't provide the breakdown:
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ilmoro
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Post by ilmoro on Mar 2, 2023 12:10:03 GMT
Having just crunched some very rough numbers in relation to performing loans, my AA seems to have paid 5.37%.
Another factor is what is the fee period from which the 2.4% pa is related. AC have calculated it as 1/12th but if the period is only the calendar month of Feb, then the actual return is 2.65%
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Post by bob2010 on Mar 2, 2023 13:01:59 GMT
What do people think was AC's motive of raising the interest rate to 4% given that they introduced the fees at the same time?
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ilmoro
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'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 Mar 2, 2023 13:22:24 GMT
What do people think was AC's motive of raising the interest rate to 4% given that they introduced the fees at the same time? 30DAA had a minimum target rate of 4% so when they merged it into the QAA they had to increase the target rate or would be in breach of the account terms (maybe regulatory issues as well in relation to COBS). No target rate for 90DAA so that wont be an issue.
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dermot
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Post by dermot on Mar 3, 2023 9:26:18 GMT
Any thoughts as to the date capital repayments will start? Autumn, perhaps?
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alender
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Post by alender on Mar 3, 2023 11:24:25 GMT
I guesstimate there is about £5.7m of cash in AAs versus unfunded tranche commitments of £11.3m. So there is a shortfall of circa £5.6m to go yet before we’re close to partial AA capital payouts. My current guesstimate is that there is about £7.1m of cash in AAs versus unfunded tranche commitments of circa £9.8m. So there is a shortfall of circa £2.7m to go yet before we’re close to partial AA capital payouts. Late spring / early summer might be a better guess at partial repayments of AAs money back to lenders. Do you know how much is in the PF as this could be added to the cash along with an future additions to the PF so payouts start sooner, as the PF is the property (or at least should be) of the lenders. The PF is now pointless as just holds funds for defaults which will fall on the lenders either through the PF or less payouts at the end if the PF has already been paid out. In this high inflation environment the quicker money is distributed the better and lender can get some half decent interest elsewhere and in worse case scenario help some lenders through a difficult time. Lenders are currently losing over 10%pa on these funds due to inflation However I suspect AC have some use for the PF which does no benefit lenders, in the end if there is any money left in the do AC pocket this? The quicker lenders cash is out of the hands of AC the better.
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ilmoro
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Post by ilmoro on Mar 3, 2023 12:01:59 GMT
My current guesstimate is that there is about £7.1m of cash in AAs versus unfunded tranche commitments of circa £9.8m. So there is a shortfall of circa £2.7m to go yet before we’re close to partial AA capital payouts. Late spring / early summer might be a better guess at partial repayments of AAs money back to lenders. Do you know how much is in the PF as this could be added to the cash along with an future additions to the PF so payouts start sooner, as the PF is the property (or at least should be) of the lenders. The PF is now pointless as just holds funds for defaults which will fall on the lenders either through the PF or less payouts at the end if the PF has already been paid out. In this high inflation environment the quicker money is distributed the better and lender can get some half decent interest elsewhere and in worse case scenario help some lenders through a difficult time. Lenders are currently losing over 10%pa on these funds due to inflation However I suspect AC have some use for the PF which does no benefit lenders, in the end if there is any money left in the do AC pocket this? The quicker lenders cash is out of the hands of AC the better. The PF is the property of AC. The value of the PF is on the key account terms page for each auto account, updated every 3 months (oh dear!) There isnt a lot of money in it, less than £1m, and distributing it will make little difference to timescales for release of funds and probably is a regulatory no no. Both development drawdowns & redemptions are behind the original schedule which will prolong the timescale for capital release from the AA, though the fact that some developments are not now proceeding has mitigated the future funding requirements by a couple of mil
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ilmoro
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Post by ilmoro on Mar 25, 2023 12:11:36 GMT
My current guesstimate is that there is about £7.1m of cash in AAs versus unfunded tranche commitments of circa £9.8m. So there is a shortfall of circa £2.7m to go yet before we’re close to partial AA capital payouts. Late spring / early summer might be a better guess at partial repayments of AAs money back to lenders. #1571 redemption monies are in and are a big step in closing/completely covering any shortfall in covering unfunded tranche commitments. We must now be very close to partial repayments. Certainly within the timeframe quoted “ we remain on course to commence Access Account capital distributions by June 2023”. I would guess partial repayments commence ahead of June. Once redemption is distributed the free cash in the AA will be over £10million so enough to cover known funding commitments. The question then will be how much of a buffer will AC seek to hold to cover unknown funding requirements like forbearance (NB the latest update has already prepared the groundwork there). #1226 partial redemption looks to be the key as that would give £3m headroom, but given a party involved not sure how much hope Id put on that happening to plan, so maybe #1532 in May will be the catalyst.
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