Liz
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Post by Liz on Aug 25, 2015 14:52:02 GMT
I can't work out the risk of loss on wind turbine loans. The risks seem low, bit with most being refinanced after 1 year are investors being fully compensated?
9.5% on a wind farm vs 6.5% on RS, which is the best deal?
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bigfoot12
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Post by bigfoot12 on Aug 25, 2015 15:11:16 GMT
9.5% on a wind farm vs 6.5% on RS, which is the best deal? I am happy to have both I can't work out the risk of loss on wind turbine loans. The risks seem low, bit with most being refinanced after 1 year are investors being fully compensated? I am not very worried about the refinance risk. Assuming the turbine is built, connected and qualifies for the FIT then there should be enough income to service the loan and possibly default interest if it isn't repaid on time. I think that the risk is on the construction and connection. One loan I had didn't complete construction on time and so qualified for a lower FIT making the loan much less attractive. You need to be sure that all consents are in place, the devolper knows what he is doing and that there is a decent amount of equity involved to protect the LTV. (I'm not sure which platform you are looking at, most of the wind turbine loans I have lent part of have a life of about 3 years.)
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james
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Post by james on Aug 25, 2015 16:07:14 GMT
I can't work out the risk of loss on wind turbine loans. The risks seem low, bit with most being refinanced after 1 year are investors being fully compensated? 9.5% on a wind farm vs 6.5% on RS, which is the best deal? Also worth a look at Ablrate for the plane refinancing loan due to go live on Thursday and the others due to go live on Wednesday, 10% or so. And secondary market around 10% or so on some shipping containers if that interests you, all secured. SavingStream may still have something left at 12% or something coming up, don't watch that so closely. Nothing at the moment at MoneyThing but worth a look also, both of those two deliver 12% typically. The purpose is to diversify yourself now and also to spread the money around platforms to help to encourage a longer term nice competitive market. If you have 10-15% of your total investments in one platform it's much easier not to be worried about any glitches that happen. The lower the percentage the easier it is. This is total investments, not just P2P investments, but 25% is relaly too high for total, better to stick to 10%, 5% if cautions, maybe up to 15% or more if you can handle lots of investment risk. Agree with bigfoot12 about the wind farm risk, once it's built it's got a solid revenue stream.
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Post by lynnanthony on Aug 25, 2015 17:23:29 GMT
Out of interest, have any wind turbine p2b loans been going long enough to reach the "refinance or sale" point? If not it will be interesting to see how the first few go. Not that I'm expecting problems. Maybe p2b wind turbine refinance loans will start appearing?
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Post by p2plender on Aug 25, 2015 18:04:28 GMT
could be a load of hot air..
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mikes1531
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Post by mikes1531 on Sept 10, 2015 19:53:04 GMT
The main risk factors that will impact the LTV and debt cover are: a) missing a FIT deadline: if the FIT deadline is missed the WT will typically drop to the next FIT rate (this info can be found on the Ofgem website). ... One way to avoid this risk is to make investments via the secondary market after the WT has been commissioned and the FiT is known. This is possible via AC, though it can take a while to build up a significant investment when picking up loan parts in tiny pieces.
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Post by lynnanthony on Sept 11, 2015 6:09:37 GMT
Most wind turbine loans, not being fully amortised, have an exit strategy of "sale or re-finance". Does anyone have a view on that? There are going to be quite a lot of similar loans coming due round about the same time. Will there be a glut on the market? Will re-finance be readily available?
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bigfoot12
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Post by bigfoot12 on Sept 11, 2015 6:33:07 GMT
Most wind turbine loans, not being fully amortised, have an exit strategy of "sale or re-finance". Does anyone have a view on that? There are going to be quite a lot of similar loans coming due round about the same time. Will there be a glut on the market? Will re-finance be readily available? My view is that once the turbine is built, connected and the FIT signed then the loan is much less risky. Most of those looking to refinance are looking to refinance the whole farm rather than one turbine and as it is less risky they are expecting a lower rate. If something caused the market to seize up so that they couldn't refinance we would be trapped in a loan that had become less risky, possibly paying default interest. There are some risks, If inflation was very high we might find ourselves worse off, but the turbine owner would be okay because his payments are index linked so it should be possible to agree something. The biggest risk for me is that the model might have got the wind wrong.
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pikestaff
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Post by pikestaff on Sept 11, 2015 7:07:46 GMT
Most wind turbine loans, not being fully amortised, have an exit strategy of "sale or re-finance". Does anyone have a view on that? There are going to be quite a lot of similar loans coming due round about the same time. Will there be a glut on the market? Will re-finance be readily available? I'm not too worried about availability. I think long-term refinancing is likely to be on an index-linked basis and there is still a lot of demand for index-linked assets from pension funds. Compared to this demand, volumes remain pretty small. Refinancing may turn out to be more expensive than the promoters hope but, provided the LTV is not too tight, we should be fine.
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Post by tybalt on Sept 11, 2015 8:18:00 GMT
There are about three index linked Wind Turbine loans on ThinCats on of which is 10 years at 7%. Broadly I believe there is sufficient buffer in the calculations of yield for the finance to be safe. I am surprised that none of the other loans have been refinanced early once they one year from commission point has passed.
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Post by marek63 on Sept 21, 2015 18:53:59 GMT
With some serious direct equity exposure to turbines as well I predict many of the current WT on the P2P platforms will be absorbed by larger consolidators and refinanced out of the P2P space into private funds. Certainly that is what we want to see happen with our equity investments. An 18 year index linked asset with proven performance as part of a WT portfolio is attractive to pension funds and long term investors. So the current set of 2-4 year development loans will gradually disappear and are unlikely to be replaced over the medium term given the current Government's FIT strategy. BUT, given that there is a window of pre-accreditation to the end of September we should see a few more good development deals over the next 12 months as the last pre-accreditations are utilised. Those deals will then be refinanced and the P2P/green link will probably fall away. I don't see P2P currently having the depth of market to provide long term finance at 8% for 18 years for the millions of pounds required to refinance the current development deals across FK/TC/AC.
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Post by ablrateandy on Sept 22, 2015 10:31:19 GMT
The main institutional guys never wanted the development risks but once they get up and running the rates that a big fund will be willing to receive will be well below 5pc assuming some stability on FITs etc.
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