am
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Post by am on Oct 25, 2015 13:06:10 GMT
16662 is an A-rated loan for £138,840. When the company borrowed £88,900 3 months ago they were rated B, but we don't even have new accounts offered - the latest accounts have gone from nearly 11 months old to nearly 14 months old.
They are repaying the previous loan. I do wonder whether saving 0.8% per annum on the loan rate is worth the additional upfront cost of the arrangement fees.
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blender
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Post by blender on Oct 25, 2015 17:01:43 GMT
Perhaps they really need the top up.
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oldgrumpy
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Post by oldgrumpy on Oct 27, 2015 10:37:40 GMT
I highlighted the sudden upgrade of a haulage company's risk band from C to A+ when they wanted a new loan recently (partly to repay the old) on another thread. Others have noted risk band changes too.
Today I see that four of my holdings are "expressing an interest in settling" older loans and will be submitting new requests soon. Three of them will get lower interst rates; one won't .... on existing risk bands.
It will be interesting to monitor all such replacement loan activity, to see how many (if any) are awarded risk bands differing from the original. Has anyone been doing that in any depth since fixed rates were introduced?
edit: The A has gone to A+
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acky
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Post by acky on Oct 27, 2015 11:40:53 GMT
I highlighted the sudden upgrade of a haulage company's risk band from C to A+ when they wanted a new loan recently (partly to repay the old) on another thread. Others have noted risk band changes too. Today I see that four of my holdings are "expressing an interest in settling" older loans and will be submitting new requests soon. Three of them will get lower interst rates; one won't .... on existing risk bands.
It will be interesting to monitor all such replacement loan activity, to see how many (if any) are awarded risk bands differing from the original. Has anyone been doing that in any depth since fixed rates were introduced? edit: The A has gone to A+
This information can be gleaned from the loanbook (with a bit of effort and Excel manipulation). I may not have the fixed loan cut-off exactly right (I’ve gone from loan 16043 forwards as 16042 was the last loan where min rate <> max rate). Up to a couple of days ago, in this time, there have been 130 loans accepted for organisations with a “related auction” in the loanbook.
Of these, 87 did not change risk band from their previous loan (although 5 of these had previously improved risk band on an earlier loan). Of these 87, 23 were already A+ and so could not improve. Thus, 43 of the 130 organisations have changed risk band. Of these, 36 have improved risk band and 7 have gone the other way.
Improvements are A to A+ (7), B to A (8), B to A+ (6), C to B (2), C to A+ (8), D to C (1), D to B (2), D to A (1) and D to A+ (1).
The 7 going the other way are A+ to A (2), A+ to B (2), A to C (1), B to C (1) and C to E (1).
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oldgrumpy
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Post by oldgrumpy on Oct 27, 2015 11:52:31 GMT
Thank you acky  I am an Excel non-starter  |
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blender
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Post by blender on Oct 27, 2015 11:52:31 GMT
Very illuminating. We had rather suspected that they were letting a little more risk into the A+ band. The only definition is the overall loss rate, and so individual loans do not matter, just the performance of the band when fully diversified. Of course the A+ secured property loans should perform much better than the band (touches wood) and therefore there is clearly room for some SME risk. I just wonder whether the A+ population will not be homogeneous - may contain a group of property loans which are better than 0.6%, and a group of SME loans which turn out to be rather worse.
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acky
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Post by acky on Oct 27, 2015 12:11:35 GMT
Very illuminating. We had rather suspected that they were letting a little more risk into the A+ band. The only definition is the overall loss rate, and so individual loans do not matter, just the performance of the band when fully diversified. Of course the A+ secured property loans should perform much better than the band (touches wood) and therefore there is clearly room for some SME risk. I just wonder whether the A+ population will not be homogeneous - may contain a group of property loans which are better than 0.6%, and a group of SME loans which turn out to be rather worse. I'm sure you are right to wonder about the lack of homogeneity of the A+ population. My FC strategy now is built around the assumption that the property loan default rate will be less than 0.6% (about 0.6% less by the time I sell!!), and I would be amazed if the default rate on SME A+ does not turn out to be somewhat higher given the loans that are getting that classification now.
Btw, should have mentioned, my analysis of band changes excluded property loans as of course they don't change band from one tranche to another.
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am
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Post by am on Oct 27, 2015 12:27:51 GMT
Very illuminating. We had rather suspected that they were letting a little more risk into the A+ band. The only definition is the overall loss rate, and so individual loans do not matter, just the performance of the band when fully diversified. Of course the A+ secured property loans should perform much better than the band (touches wood) and therefore there is clearly room for some SME risk. I just wonder whether the A+ population will not be homogeneous - may contain a group of property loans which are better than 0.6%, and a group of SME loans which turn out to be rather worse. There is the argument that paying instalments on an FC loan without incident increases the creditworthiness of a business, or at least it's credit rating, so it's not too surprising to see a preponderance of changes in the direction of lower risk. What made the loan mentioned in the OP stand out was the the documented difference was 3 loan repayments (a minuscule decrease in assessed risk), a larger loan value (which should make it riskier), and even older accounts (which should make it riskier). Nowadays there appears to be a predominance of A and A+ loans on the site, but that could be an illusion, with other loans filling, being accepted, and disappearing from view before the week is out. Has anyone compared the distribution of risk bands before and after the start of the new regime?
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acky
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Post by acky on Oct 27, 2015 12:51:56 GMT
Very illuminating. We had rather suspected that they were letting a little more risk into the A+ band. The only definition is the overall loss rate, and so individual loans do not matter, just the performance of the band when fully diversified. Of course the A+ secured property loans should perform much better than the band (touches wood) and therefore there is clearly room for some SME risk. I just wonder whether the A+ population will not be homogeneous - may contain a group of property loans which are better than 0.6%, and a group of SME loans which turn out to be rather worse. There is the argument that paying instalments on an FC loan without incident increases the creditworthiness of a business, or at least it's credit rating, so it's not too surprising to see a preponderance of changes in the direction of lower risk. What made the loan mentioned in the OP stand out was the the documented difference was 3 loan repayments (a minuscule decrease in assessed risk), a larger loan value (which should make it riskier), and even older accounts (which should make it riskier). Nowadays there appears to be a predominance of A and A+ loans on the site, but that could be an illusion, with other loans filling, being accepted, and disappearing from view before the week is out. Has anyone compared the distribution of risk bands before and after the start of the new regime? Old world (from loan 10000 to 16042, about 8 months); A+ 28%, A 29%, B 20%, C 13%, D 8%, E 2% New world (from 16043): A+ 40%, A 24%, B 18%, C 9%, D 4%, E 5% Includes WL and PL
For PL only:
Old world: A+ 29%, A 28%, B 19%, C 13%, D 9%, E 2%
New world: A+ 43%, A 28%, B 16%, C 7%, D 3%, E 2%
Q.E.D.!
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Post by GSV3MIaC on Oct 27, 2015 13:10:39 GMT
Acky does that include or exclude property, and is it by number or loans or value?
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bigfoot12
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Post by bigfoot12 on Oct 27, 2015 14:19:14 GMT
Two recent loan requests are both for scaffolding companies. One (16774) is A+ which looks too high to me and the other (16801) is A. I would have thought the second of those two is the better credit. What am I missing?
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acky
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Post by acky on Oct 27, 2015 14:40:32 GMT
Acky does that include or exclude property, and is it by number or loans or value? My figures previously posted included Property and SME loans. For SME loans ONLY, the figures are
For WL and PL: Old world (from loan 10000 to 16042, about 8 months); A+ 24%, A 29%, B 22%, C 14%, D 8%, E 2%
New world (from 16043): A+ 36%, A 25%, B 19%, C 10%, D 5%, E 5%
For PL only:
Old world: A+ 20%, A 30%, B 22%, C 15%, D 10%, E 3%
New world: A+ 33%, A 32%, B 20%, C 9%, D 4%, E 3%
All figures are by number of loans, NOT weighted by value.
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acky
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Post by acky on Oct 27, 2015 14:42:55 GMT
Two recent loan requests are both for scaffolding companies. One (16774) is A+ which looks too high to me and the other (16801) is A. I would have thought the second of those two is the better credit. What am I missing? Either it's the old, invisible "personal guarantee" ..... or 16774 wouldn't pay more than 8.3%!
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Post by GSV3MIaC on Oct 27, 2015 15:12:29 GMT
Two recent loan requests are both for scaffolding companies. One (16774) is A+ which looks too high to me and the other (16801) is A. I would have thought the second of those two is the better credit. What am I missing? Nothing. The WL folks agreed with you, that A+ looks to be one of their rejects.
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blender
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Post by blender on Oct 27, 2015 15:17:59 GMT
Two recent loan requests are both for scaffolding companies. One (16774) is A+ which looks too high to me and the other (16801) is A. I would have thought the second of those two is the better credit. What am I missing? Either it's the old, invisible "personal guarantee" ..... or 16774 wouldn't pay more than 8.3%! Scaffolding company wants a loan of half its annual profits or four times its net worth to buy more scaffolding. Current liabilities twice current assets, difference about the same as the loan. Hmmm. 'Asset finance' with no asset security - I wonder why? Credit score 15. Why A+? perhaps because it's supplies high class scaffolding to the gentry. I like the other title "In pole position". Excellent, and they may be in a position to spend the loan on scaffolding. An A possibly because the repayments higher over 36 months. I would choose the same as bigfoot - lower risk, better rate.
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