am
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Post by am on Aug 5, 2015 12:17:10 GMT
There were some parts in an E-rated loan selling at a discount of 0.7%. (They disappeared before I could transfer in some money for purposes of arbitrage.) There are/were some E-rated loan parts on sale at a premium of 0.2%, but doesn't cover FC's transaction fees, but depending on the age of the loan may still make a profit after interest is paid. I suppose even at discount of 0.7% might have been profitable after interest, with a monthly rate of about 1.5%, but this loan was only a week old.
So it appears that someone has decided to take a loss. (Or maybe finger trouble and it was meant to be an 0.7% premium.)
It's not as if on the face of it the loan (14555) looks particularly bad - it's for refurbishment of a rental property portfolio, with plenty of equity in the portfolio. With more details as to the nature of the business, and the pledge of some property as security, I would have thought that the borrower could have got a lot better rate.
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fasty
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Post by fasty on Aug 7, 2015 20:39:09 GMT
Heaps of 13934 being dumped at PAR (18.2%) today. Makes me nervous; perhaps someone has a strategy to exit just before first payment.. I suppose that would make quite a reasonable return even after fees.
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adrianc
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Post by adrianc on Aug 7, 2015 21:53:33 GMT
Is "arbitrage" a posh word for "flipping"?
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Post by nickthefool on Aug 7, 2015 22:11:30 GMT
Heaps of 13934 being dumped at PAR (18.2%) today. Makes me nervous; perhaps someone has a strategy to exit just before first payment.. I suppose that would make quite a reasonable return even after fees.
If you were guaranteed to sell at par just before repayment then it's a decent return. I suppose the risk is that if too many people do it then returns get squeezed or you end up keeping parts through repayments which you were hoping to avoid. But for example selling at par after holding for around 25 days gives around 12% apr return after FC fees.
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Post by goldservice on Aug 8, 2015 7:40:54 GMT
Heaps of 13934 being dumped at PAR (18.2%) today. Makes me nervous; perhaps someone has a strategy to exit just before first payment.. I suppose that would make quite a reasonable return even after fees.
It's certainly 'just before'. The first repayment is due tomorrow, 9 August. There are at least 5 other E loans with first repayment due tomorrow. Those five currently have fewer parts for sale than 13934.
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agent69
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Post by agent69 on Aug 8, 2015 8:27:23 GMT
Heaps of 13934 being dumped at PAR (18.2%) today. Makes me nervous; perhaps someone has a strategy to exit just before first payment.. I suppose that would make quite a reasonable return even after fees.
But for example selling at par after holding for around 25 days gives around 12% apr return after FC fees. Does that include the effect of your money not earning anything during the 7 day bidding period or the 7 day acceptance window?
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blender
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Post by blender on Aug 8, 2015 8:49:54 GMT
Seven minute bidding period more like. The 'E' I wanted, the first big one, had a substantial amount of my money sitting for nearly two weeks before declining to accept the offer. I decided that the only Es that I would wish to buy would not take the money at the rates offered (ie could use FC's evaluation and our offer as a basis for getting a better deal elsewhere). Es are strictly for traditional flippers and 'consumer lenders' imo.
[on reflection this post is about as grumpy as a grumpy thing on grumpy day - but I feel better for doing it]
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Post by goldservice on Aug 8, 2015 10:09:15 GMT
Seven minute bidding period more like. The 'E' I wanted, the first big one, had a substantial amount of my money sitting for nearly two weeks before declining to accept the offer. I decided that the only Es that I would wish to buy would not take the money at the rates offered (ie could use FC's evaluation and our offer as a basis for getting a better deal elsewhere). Es are strictly for traditional flippers and 'consumer lenders' imo. [on reflection this post is about as grumpy as a grumpy thing on grumpy day - but I feel better for doing it] Who (or where) is grumpy?
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blender
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Post by blender on Aug 8, 2015 12:13:00 GMT
I am grumpy-cuss.
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Post by GSV3MIaC on Aug 8, 2015 13:36:52 GMT
I think the real Grumpy must be taking a banana-break to somewhere more tropical?
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SteveT
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Post by SteveT on Aug 8, 2015 13:39:40 GMT
I think the real Grumpy must be taking a banana-break to somewhere more tropical? Wales, I read elsewhere. Presumably the hot and steamy jungle-clad part.
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blender
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Post by blender on Aug 8, 2015 13:46:45 GMT
Maybe he has joined FC's recovery team in the Land of Song (but no Brass). A King Kong figure might help.
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Post by GSV3MIaC on Aug 8, 2015 13:59:33 GMT
Lots of brass .. much of it squashed b-flat. 8>.
Back on E-flipping topic: since we know there is at least £50k of autobid capacity on most loans (Es maybe a bit lower, until the clueless wake up and set the slider), it would appear that flipping a small one at par in the couple of days before payment ought to be pretty safe. Large ones, maybe not. Personally I couldn't be bothered for the rate of return that'd offer (given the delays in drawdown, and the uncertainty thereof), but I don't think the 'might not be able to unload at par' is a real issue. Now 'might not be unable to unload at a 3% markup' .. yep, that is for sure true (mostly!).
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adrianc
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Post by adrianc on Aug 8, 2015 16:30:20 GMT
but I don't think the 'might not be able to unload at par' is a real issue. Indeed it doesn't appear to be - I've shoved my couple of parts in the (£42k) A-E IOU up at par, just to get shot (first repayment due in the next few days) and three have sold in the course of a few hours. Yes, I could have put 'em up for a snidge more, but there's plenty on the market, and I'm going to be getting the sale fee back anyway...
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min
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Post by min on Aug 8, 2015 18:01:12 GMT
Does that include the effect of your money not earning anything during the 7 day bidding period or the 7 day acceptance window? With fag packet calculations on a guesstimate of a 7 day wait to start accruing (based on some loans will draw down immediately, others will be tied up for 14 days and then get rejected) a 25day hold of £20 sold at par produces a gain of 20p / 1%, total time involved 32days. If it then takes a further 7 days (guess, based on availability of E loans, and ability to get them) to start the process again that's a rolling period of 39 days, there are 9.36 39day periods in the year so 9.36%. So it might be possible to make [say] 10% tax free and with minimal risk from E's, but sounds like a lot of work to save the tax though, when 12% is available elsewhere which gives you 9.6% after (basic) tax and doesn't require an all day 'glued to the screen' lifestyle and has much more £££ availability. Although that might be bolstered by some of the more attractive/rarer E's selling at premium. So the same £20 held for 22days, sold at 0.5 premium, would give a 36day rolling period yield of 27p / 1.35% x 10.14 (rolling 36day periods p/a) gives a tax free yield of 13.69%. For 1% premium that rises to 18.76%, again tax free. That's now starting to look attractive, but it relies on being able to have the time to assess each E before having to pile in, or being so ridiculously attentive that you can grab the tiny £5k loans (14611 is only available at 3% premium), or taking enough of a loan to have a monopoly on the selling price. (The B*z approach) Wow that's a big fag packet!
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