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Post by GSV3MIaC on Feb 13, 2014 14:31:34 GMT
seems unlikely given the smallish number of loan parts for most loans .. typically a thousand or two. I think lack of funds is probably more likely, plus 28 pages of at-par parts to choose from (many of them multiples). I did shift some, but only 15%-20% of what I listed.
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blender
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Post by blender on Feb 13, 2014 18:03:14 GMT
At present there are about 3250 loan parts for sale at par or better - over 100 at a discount. Most of these at par are C loans in the mid 9 percents, presumably being churned to fund purchases at better rates (or to withdraw). Autobid is working on the secondary market but buyers are fewer than sellers. I have sold about 17 parts today, all at par, but have about 100 more out there, mostly older C- loans which are now below MBR (not a good thing). Perfectly good, but better and safer parts are to be bought at auction.
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mikeb
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Post by mikeb on Feb 13, 2014 18:53:33 GMT
It is not just the sub MBR parts which are not shifting at par through autobid. It must be quite a serious lack of cash. And now C- parts at 11.5% at par will not shift, though MBR is 11.6% of course. I would love a cashback promotion, but what FC need to do is advertise nationally, preferably on TV, to increase brand awareness and actually generate some serious cash from new customers. (That is now that I have all I want at the higher rates). Either there is a major liquidity problem or the SM function has expired, I’ve sold nothing in the last 24 hours and my asking prices are not greedy or silly. In regard to the every upward creep of MBR, I'm sure FC (Samir himself) said that they did not foresee any changes to liquidity and operation of the secondary market. And further, that there was no evidence that the secondary market was becoming bunged up. Can you see it yet? It is very much grinding to a halt, the only thing moving is at-par, and even then it does seem to be little bursts of the same person buying multiple parts, therefore existing lenders not picking up due to existing exposure. Either that, or the secondary market is being hobbled to divert all new cash into the endless supply of new loans that are appearing: Where ARE they coming from all of a sudden? Not wishing to look a gift-horse in the mouth, but you gotta wonder ... is this the result of the tie up with Santander that was mooted, and we're getting the back end of all the loans they don't want to fully fund?
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maxmarengo
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Post by maxmarengo on Feb 14, 2014 9:27:24 GMT
I have experienced the same as the previous posters - parts not selling as quickly as I had expected and difficulty shifting 0 premium parts below MBR. So I though I'd have a look at activity on the secondary market using FCs stats on turnover. The chart below shows some trends over the last 18 months:  Data points are typically 1 week apart and show the activity over the previous week. The lines are: - Blue (RH scale): New Money - the amount of new money injected in to FC each week. Based on increase in principal outstanding less an allowance for interest paid to lenders. - Green (LH scale): LP vs New Money% - Sales in the secondary market divided by the new money in the period. - Red (LH scale): LP vs Lent% - Sales in the secondary market divided by the total money lent in the period. Looking at the red and the green you can see the market is very different to a year ago. The market now is much more stable and, apart from the new year dip in loans, has been running at about 17% red and 25% green vs levels nearly twice that a year ago. Looking over the last 6 months, what stands out is the spike in activity on the secondary market when the amount of new loans dried up after Christmas. Since then, the turnover on the secondary market is at a similar level to before Christmas. So there has not been a sudden change - someone is getting their parts bought. For me the lesson is to unload as much as possible when the market for new loans is at a low. |
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oldgrumpy
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Post by oldgrumpy on Feb 14, 2014 9:32:09 GMT
Nice one Max! I shifted a good bunch of A and A+ at well below MBR since yesterday evening, so my concerns have been (relatively) unfounded; there is no subterfuge going on. Your last sentence rings very true - and has been noted.  |
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Post by GSV3MIaC on Feb 15, 2014 21:42:56 GMT
Nice analysis, thanks. Would be interesting to see the secondary market rates too, but not sure that data is available?
They've been fair flying off the shelves again today, albeit at higher buyer rates than a few weeks ago (in some cases LOTS higher, but then, so are primary market rates), so I guess there was just a temporary blip. There are still quite a lot of 'at par' parts littering the shelves though .. a lot of today,s buying was liveware/selective, with one or two previously unknown players hoovering up quite a lot..
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blender
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Post by blender on Feb 15, 2014 23:23:52 GMT
I am not sure about the temporary blip. The measure I use to judge the strength of the secondary market is the number of unsold loan parts at par or a discount. On Thursday I reported about 3250 but today Saturday it has been consistently about 5500, with about 170 parts at a discount.
(Must get out more)
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maxmarengo
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Post by maxmarengo on Feb 16, 2014 18:35:09 GMT
Blender - I like your measure. Better than the total market - a lot of people list parts in hope rather than expectation.
Do you keep a log and can you share the trend with us?
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blender
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Post by blender on Feb 16, 2014 19:11:39 GMT
Blender - I like your measure. Better than the total market - a lot of people list parts in hope rather than expectation. Do you keep a log and can you share the trend with us? Hi maxmarengo - I find your data here very useful. Sorry I do not keep a log of the number of loan parts unsold at par or a discount (UPZero?), but I believe it is a proxy for secondary market strength, inversely, because only those who seriously wish to sell will take the FC fee. It is easily found by going to loan parts , setting the premium filter to 0% and clicking on the last page to find the number of pages. The number for UPZ has been increasing rapidly through last week, though I do not have a starting point. We are now seeing some C- loan parts at the top rate offered at par just before the first repayment, which is a new sign of failure to flip at the normal 0.2 or 0.3%. But this will also be a function of the new MBR. Last year, through the Autumn, there have often been no such loan parts, though large size loan parts and 4% parts seem to stick around. I have not seen numbers over a hundred or two since the mad week in June when MBR was temporarily introduced and portfolios were made potentially illiquid. Then the thousands of parts were from flippers, mostly, but not so much this time, I think. The problem this time is that FC have no levers to pull and they just have to hope for more lender cash. I will monitor UPZ through next week.
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Post by GSV3MIaC on Feb 16, 2014 21:45:09 GMT
Actually FC do have at least two levers to pull, but probably don't want to pull them - they can reduce the number of new auctions listed (as happened at Xmas) &/or they can direct more of the recycled autobid money into the secondary market, rather than the new auctions. (They could also stop jacking up the MBR for a bit, since that just adds to the liquidity problem, as people dump 9.5% Cs in the hope of buying fresher 9.9% ones (or whatever), but I suspect that'd have a delayed/minor impact).
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jimbo
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Post by jimbo on Feb 16, 2014 23:26:29 GMT
They could also offer cashback to existing lenders, which I suspect they will if the current high rates go on for much longer and their "Recruit a friend" cashback offer is not successful...
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blender
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Post by blender on Feb 17, 2014 12:24:31 GMT
UPZ, number of unsold loan parts with max premium zero, was 5206 at noonish today.
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