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Post by GSV3MIaC on Mar 31, 2015 17:26:31 GMT
Apart from A+, which seems pretty much stuck, all the other risk bands are down ~0.4% on the *SM* over the last month (from a not very exciting starting position too) and 1% down on the year (looking at the price for the 500th part of £100 or less).
A+ A B C C-
12/31/2014 9.9 10.8 11.8 13.4 13.6
31/01/2015 8.9 10.4 11.4 12.9 13.5
28/02/2015 9.1 10.2 11.1 12.9 13.7
31/03/2015 9.1 9.8 10.7 12.4 13.3
How low can it go?
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SteveT
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Post by SteveT on Mar 31, 2015 17:45:08 GMT
Great figures. From a SM seller's perspective, the lower the better (with premiums set commensurately higher). Most A+ parts currently move along very nicely at 8.5-8.8%, As in the mid 9s, Bs in the low 10s and Cs around 12%. 8 weeks ago it was a different story.
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Post by ratrace on Mar 31, 2015 18:48:47 GMT
As someone who now only buy's on the SM. l think the trick to doing well on the SM is not to focus just on the rates, but its to get a good level of return for the risk you are taking on.
This is where l feel there is better value to be had on the SM then there is on the main market.
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sl75
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Post by sl75 on Apr 1, 2015 9:32:38 GMT
Just below the MBR (or more precisely just below "the market rate" on the PM, which itself cannot fall below MBR) Anything below that, and arbitrage will occur, preventing the SM rates from falling any further... whether it WILL fall that low is of course an entirely different matter. In a market where all loans are filling at MBR, there'd probably also be some speculative holding of loan parts in anticipation of FC announcing a reduction in MBR, allowing a larger premium to be demanded for the loan parts from before the reduction, but I'd expect the short-term "sell at 0.3% to 0.5% premium, immediately re-invest in new loans, rinse and repeat" strategy would dominate. For myself, I've been reduced to just 9 loan parts offered for sale at a premium, and I'm guessing I'll be sold out by the end of the week. That'll then leave me only with substantially above-market loan parts I'm unwilling to sell for a 3% premium, and substantially below-market loan parts that I'm currently offering at par value (mainly because I've not yet devised an efficient method to determine an appropriate discount whilst avoiding inadvertently selling at a loss).
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blender
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Post by blender on Apr 1, 2015 10:44:22 GMT
I would not be betting on FC reducing MBR. It has taken some time to get them where FC would wish. In mid 2013 when the MBR debacle took place, FC wished to set MBRs at 6%, 7.5%, 9.3% and 10.5% (no C- then) and now they are at 6%, 8%, 9% and 10.2%. The big difference from mid 2013 is that CPI inflation was then 2% and now it is 0%, so that real interest rates are higher. But I doubt FC will worry too much about that, and in any case the MBRs at the higher bands - say B up - are what they are to cover risk rather than track general interest rates.
I guess FC will be happy with the MBR floor, and they now use the institutions and whole loans to limit the top end of interest rates - producing a band within which they are happy for rates to float.
Having said that, there are also the tax income changes to come, and I would not like to predict the effects of that on MBR, except that FC will look for stability on MBR and should anticipate the tax changes.
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Post by ratrace on Apr 1, 2015 17:38:14 GMT
lt sounds like you guys are having to do a lot active trading to get ahead.
Where on the the SM l can chill out with what is a mainly "buy and hold" investment style and yet still get very good returns. At the moment my GY is 11.4% yet my AR is at 11.8% so l feel l must be doing something right.
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SteveT
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SM rates
Apr 1, 2015 17:47:09 GMT
via mobile
Post by SteveT on Apr 1, 2015 17:47:09 GMT
Click on the electronic worm-hole through space-time to around 3 months ago. Failing that, follow the crowd heading to Moneything / Saving Stream / FundingSecure / ReBuilding Society (amongst others)
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Post by ratrace on Apr 1, 2015 18:19:13 GMT
l stick with FC because as a small investor it is so easy to spread my risk.
At the moment am getting my return for taking on the same level of risk as the A band on the main market. This is what makes me stick with FC.
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Post by goldservice on Apr 2, 2015 9:21:33 GMT
lt sounds like you guys are having to do a lot active trading to get ahead. Where on the the SM l can chill out with what is a mainly "buy and hold" investment style and yet still get very good returns. At the moment my GY is 11.4% yet my AR is at 11.8% so l feel l must be doing something right. This looks good if it is all in A and A+. Have you had any defaults yet? How diversified are you? Which RBs do you buy?
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Post by ratrace on Apr 2, 2015 17:35:49 GMT
Hi goldservice l have my money in 128 businesses with a 2% max holding. So far l have had one been downgraded. In the SM l only buy C- parts for the high return, but only when am happy with the business and that they also have made a certain amount of repayments to reduce to risk of default down to around the A band level.
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blender
Member of DD Central
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Post by blender on Apr 2, 2015 17:57:30 GMT
That is an original scheme. After how many repayments does a C- have the same risk profile of a new A loan? Do they then become increasingly safe?
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chrisf
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Post by chrisf on Apr 2, 2015 17:59:22 GMT
Hi goldservice l have my money in 128 businesses with a 2% max holding. So far l have had one been downgraded. In the SM l only buy C- parts for the high return, but only when am happy with the business and that they also have made a certain amount of repayments to reduce to risk of default down to around the A band level. You only buy C- parts and your gross yield is 11.4%? I look forward to a progress report in a years time.
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chrisf
Member of DD Central
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Post by chrisf on Apr 2, 2015 18:02:04 GMT
That is an original scheme. After how many repayments does a C- have the same risk profile of a new A loan? Do they then become increasingly safe? If the answer is 6, then I think the strategy has great synergy with the strategy of many of the seasoned FC investors
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Post by ratrace on Apr 2, 2015 18:32:44 GMT
Hi goldservice l have my money in 128 businesses with a 2% max holding. So far l have had one been downgraded. In the SM l only buy C- parts for the high return, but only when am happy with the business and that they also have made a certain amount of repayments to reduce to risk of default down to around the A band level. You only buy C- parts and your gross yield is 11.4%? I look forward to a progress report in a years time. So will l. Because if l can get this level of return for taking on the same risk of default as the A band, then am going to be very happy.
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Post by ratrace on Apr 2, 2015 18:36:10 GMT
That is an original scheme. After how many repayments does a C- have the same risk profile of a new A loan? Do they then become increasingly safe? l feel l have already said too much, l don't want to risk having you guys crowding me out of my little niche in the market. 
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