upland
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Post by upland on Oct 15, 2015 10:51:13 GMT
It seems to me that some loans are not greatly liked as there usually exists a significant supply of them. Possibly because there has been a credit event , the rate is very low , the security is perceived as thin or some other reason that I do not yet appreciate (  ). I wondered where do these loans end up ? |
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Post by jevans4949 on Oct 15, 2015 12:20:37 GMT
Live loans get left on the after-market for a variety of reasons, but probably due to "retail" investors not being impressed, either for one of the resaons you mention, or more likely doubts over the moral fibre of the borrower or the viability of his project.
Some of us also set a limit on the amount we invest per borrower, so it also depends on the number of individual investors with ready cash and the size of the loan. It probably affects the money available for second and subsequent tranches.
Under the current Assetz regime, all loans have to be funded by underwriters before they go live, and 50% of the loan is made available automatically. If nobody wants to buy up the loan parts on the aftermarket, then the holder is stuck with them.
If projects don't impress the underwriters, then they don't happen. What the (previously prospective) borrower does then is beyond our ken.
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upland
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Post by upland on Oct 16, 2015 6:13:31 GMT
Interesting , many thanks jevans
Does anyone know whether accounts like the GBBA be a resting place for these type of funds ?
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bigfoot12
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Post by bigfoot12 on Oct 16, 2015 6:43:58 GMT
Interesting , many thanks jevans Does anyone know whether accounts like the GBBA be a resting place for these type of funds ? I think that there have only been initially 'unhappy' loans from 3 lenders. If they had been eligible for one of the funds then they would have gone in. Two were/are unpopular because the crowd didn't think the rate was high enough. The rate might have been too low for GBBA as well. Whilst the other loan (trade export) the AC crowd has never taken to for some reason, it was originally listed on another platform where it was very popular, albeit smaller. Obviously a lot of the very large loans have taken a few months to fully sell. The AC crowd, in particular, seems too tempted by yield and liquidity. There are now loans for sale which have had credit events and people don't want to buy them, but they are different. In the past the GEIA has continued to buy a loan which has had a credit event which was deemed to have little impact on the security of the loan.
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Post by Deleted on Oct 16, 2015 7:15:54 GMT
Interesting , many thanks jevans Does anyone know whether accounts like the GBBA be a resting place for these type of funds ? It would seem that the short term loan at 3.75% (sorry not really interested so not sure what the TLA is) needed to suck into whatever loans were available. At this time the loans which are available are mainly those which individuals don't want. Chris's arguement is that in time that will change. My view is; I'm prepared to wait, put my money in other portals, until attractive deals come up or until the 3.75% deal gets to focus on other deals (I have a view as to when that will be and what changes AC will make to level the playing field but enough for now). 
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pikestaff
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Post by pikestaff on Oct 16, 2015 8:10:13 GMT
... Whilst the other loan (trade export) the AC crowd has never taken to for some reason, it was originally listed on another platform where it was very popular, albeit smaller. ... I think they switched from TC to AC because AC was able to offer them guaranteed underwriting, in size. They may also (I suspect) have got a good deal on fees. I'm not sure why the AC crowd has not taken to the loan but I do know that the company in question is also a sponsor/introducer on both TC and AC, and does not have a particularly stellar record. The south coast plumber is one of theirs.
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bigfoot12
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Post by bigfoot12 on Oct 16, 2015 8:34:53 GMT
... Whilst the other loan (trade export) the AC crowd has never taken to for some reason, it was originally listed on another platform where it was very popular, albeit smaller. ... I think they switched from TC to AC because AC was able to offer them guaranteed underwriting, in size. They may also (I suspect) have got a good deal on fees. I'm not sure why the AC crowd has not taken to the loan but I do know that the company in question is also a sponsor/introducer on both TC and AC, and does not have a particularly stellar record. The south coast plumber is one of theirs. I agree with you and my memory is also they wanted the guaranteed underwriting. I do wonder how many AC only lenders would have known that and had any view on the sponsor, whereas sponsors are much more visible on TC. It will be interesting to see what happens when they need to refinance the loans.
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bigfoot12
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Post by bigfoot12 on Oct 16, 2015 8:37:30 GMT
It would seem that the short term loan at 3.75% (sorry not really interested so not sure what the TLA is) needed to suck into whatever loans were available. At this time the loans which are available are mainly those which individuals don't want. Pretty sure that Chris implied that QAA would not be buying the less liquid loans. I used to track volumes on the market and I didn't see any significant falls in them at the time the QAA was introduced.
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Post by Deleted on Oct 16, 2015 8:53:36 GMT
bf you maybe right and I'm sure he said that long term he was aiming at the more liquid loans, but at the time of opening he had to take something, so he either took loans off the underwriters or off the live the system, still the loans at only 1/3 of the account value so at the start only talking about £300k+ so hardly a big shock to the sytem. My belief is he had to take some un-wanted loans.
My other arguement is that if he had taken the loan off the underwriters then so could we, hence the new account merely took advantage of our lack of access.
Either way, not the way I would like to do business (but probaby a practical solution). Note that with the medium term lack of new loans what else were they going to do? Doing nothing would have seen a removal of retail funds so they had to do something.
I think we have to accept that FC's change to their offering has had a significant affect on their competitors, outside of the pawn market and the large property market FC must be sucking in a lot of loans, this has to be causing AC significant problems and while we fret and worry, they have to re-shape their whole business. I empathise a lot with what must be happening and I hope they get it right, but I suspect it will not be to the benefits of the lenders in the long run.
Pity the factored invoice idea seems to have hit a wall, I thought that had more opportunity than most and is one deal that P2P has left alone.
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bigfoot12
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Post by bigfoot12 on Oct 16, 2015 9:04:42 GMT
bf you maybe right and I'm sure he said that long term he was aiming at the more liquid loans, but at the time of opening he had to take something, so he either took loans off the underwriters or off the live the system, still the loans at only 1/3 of the account value so at the start only talking about £300+ so hardly a big shock to the sytem. My belief is he had to take some un-wanted loans. My other arguement is that if he had taken the loan off the underwriters then so could we have, hence the new account merely took advantage of our lack of access. Either way, not the way I would like to do business (but probaby a practical solution). Note that with long term lack of new loans what else were they going to do? Doing nothing would have seen a removal of retail funds so they had to do something. My guess is that initially it bought very little, which is why interest wasn't paid when due and why they couldn't increase the cap straight away. The QAA gets priority so it will be building up holdings quite quickly as there is still some turnover on the SM. Also there is much speculation that the QAA is underwriting, so it will be getting priority access that way, with underwriting fees as well. I've been removing funds anyway. I put money into AC in June/July as there was a lot coming, but then as I was about to go on holiday I decided to buy too much of the loans available at the time: one of the hotels, welsh wind turbine, and a few other bits. I have given up waiting, I have sold my excess and withdrawn it from the platform. It is looking for a home, which might be AC but only once new loan volumes increase.
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am
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Post by am on Oct 16, 2015 9:49:26 GMT
bf you maybe right and I'm sure he said that long term he was aiming at the more liquid loans, but at the time of opening he had to take something, so he either took loans off the underwriters or off the live the system, still the loans at only 1/3 of the account value so at the start only talking about £300k+ so hardly a big shock to the sytem. My belief is he had to take some un-wanted loans. My other arguement is that if he had taken the loan off the underwriters then so could we, hence the new account merely took advantage of our lack of access. Either way, not the way I would like to do business (but probaby a practical solution). Note that with the medium term lack of new loans what else were they going to do? Doing nothing would have seen a removal of retail funds so they had to do something. I think we have to accept that FC's change to their offering has had a significant affect on their competitors, outside of the pawn market and the large property market FC must be sucking in a lot of loans, this has to be causing AC significant problems and while we fret and worry, they have to re-shape their whole business. I empathise a lot with what must be happening and I hope they get it right, but I suspect it will not be to the benefits of the lenders in the long run. Pity the factored invoice idea seems to have hit a wall, I thought that had more opportunity than most and is one deal that P2P has left alone. There are a couple of companies in the invoice factoring space - Market Invoice and Platform Black - but they have high minimum investments, and I thought that at least one of them took too big a slice of the interest. I had thought that AC could have used their invoice factoring side as the substrate for the QAA; they may not have built the volumes to open it up for retail, but they don't need much volume for the QAA. Since we're talking about it I'll mention for the benefit of any lurking AC employees that I'm interested (in pursuit of asset class diversification) in invoice factoring.
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bigfoot12
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Post by bigfoot12 on Oct 16, 2015 10:30:04 GMT
This is a great strategy for AC since it gives them cheap cash to underwrite smaller loans, which they need to compete with FC at the smaller loan end of the market (since margins are lower). It also creates a "savings account" to compete with RS and Wellesey in time for ISAs next year. It also would give them a fantastic profit or way to build up the provision fund more quickly depending upon their priorities. (9.5% * 80% = 7.6% vs 3.75% to pay out) Since we're talking about it I'll mention for the benefit of any lurking AC employees that I'm interested (in pursuit of asset class diversification) in invoice factoring. Me too Absolutely agree there is some clear space for an IF product. A player who could offer something like 5%-7.5% gross, but without the high minimum size and with more tax-friendly approach to fees, would have a decent product in the 1m to 3m deposit space. It should be easy to be better than Ratesetter. I refuse to use their 1 month products. I am being paid a short term risk but I still get saddled with the repayment risk in times of low liquidity. I might as well buy something longer (on another platform) and hope I can sell it if I need to. (I like Ratesetter's 3 and 5 year loans.)
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am
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Post by am on Oct 16, 2015 11:07:21 GMT
This is a great strategy for AC since it gives them cheap cash to underwrite smaller loans, which they need to compete with FC at the smaller loan end of the market (since margins are lower). It also creates a "savings account" to compete with RS and Wellesey in time for ISAs next year. It also would give them a fantastic profit or way to build up the provision fund more quickly depending upon their priorities. (9.5% * 80% = 7.6% vs 3.75% to pay out) A large proportion of the QAA is held as cash, so I don't think that margin is a large as you think. But does the QAA algorithm take note of the size of the money pending investment and change the balance between cash and loans when it appears that queued money would provide the necessary liquidity?
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upland
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Post by upland on Oct 16, 2015 11:17:36 GMT
Invoice Factoring - I badger AC on a regular basis and I am led to believe that things are moving ahead positively.
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bigfoot12
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Post by bigfoot12 on Oct 16, 2015 13:25:29 GMT
But does the QAA algorithm take note of the size of the money pending investment and change the balance between cash and loans when it appears that queued money would provide the necessary liquidity? Don't know, they won't tell us. If I had written the code it would have done, and it would know how much demand there is for the loans held by the QAA, and the source of funds needed to pay for them - no point releasing stock to fund a withdrawal if that stock is paid for funds currently swept into the QAA!
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). I wondered where do these loans end up ?
