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Post by coolrunning on Apr 18, 2016 19:36:11 GMT
How can BO656776 loans be on sale at 0% and -2% discounts, and have a XIRR of around -90%? Simple extract from the 2nd market page: 382650-3730018 E 1000 1 32.37% 6.16€ 9 / 12 09/05/2016 1.42€ 1.42€ / 0€ 6.94€ 6.04€ (-2.00%) -89.56% 382650-3726583 E 1000 1 32.37% 3.08€ 9 / 12 09/05/2016 0.71€ 0.71€ / 0€ 3.47€ 3.08€ (0.00%) -90.39% 382650-3716603 E 1000 1 32.37% 3.08€ 9 / 12 09/05/2016 0.71€ 0.71€ / 0€ 3.47€ 3.08€ (0.00%) -90.39%  |
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james
Posts: 2,205
Likes: 955
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Post by james on Apr 18, 2016 21:23:47 GMT
For the first of those:
Principal owed: 6.16
Value of future capital payments: 3.93
Late capital payments: 2.91
The late capital payments are being ignored in the XIRR calculation. Last payment was made on 2016-02-16 last payment missed was 2016-04-08. Do you feel lucky enough to buy one of these loans?
The more recent F rated loan also had its first and only payment of just 0.01 on 2016-02-16.
To me this looks like a picture of a borrower who has borrowed the F loan because of money trouble and who is likely to default.
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Post by coolrunning on Apr 19, 2016 5:57:04 GMT
Thanks James.
I appear to have not made my point clearly. I do not want to buy the loan.
How can a loan with a good 32% interest rate being sold at par (0%) have a XIRR of around -90% ?
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james
Posts: 2,205
Likes: 955
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Post by james on Apr 19, 2016 7:59:55 GMT
Par is 6.16. Compare that to the value of the future payments. Ignore the payments that have been missed.
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carlos
I'm short Bondora and long p2p.
Posts: 104 
Likes: 21
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Post by carlos on Apr 19, 2016 8:14:04 GMT
coolrunning:
Please read closely what XIRR means:
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Post by coolrunning on Apr 19, 2016 16:03:26 GMT
Thanks James and Carlos, you are right.
Bondora's implementation of XIRR is bizarre (why write off outstanding principal, but assume all future payments will be made?) and their costing of the loan hardly consistent (why write off the outstanding principal in the XIRR calc but keep it in the sale cost?) but they have at least explained what they do.
Conclusion: read the small print.
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Post by rahafoorum on Apr 20, 2016 8:02:01 GMT
Thanks James and Carlos, you are right. Bondora's implementation of XIRR is bizarre (why write off outstanding principal, but assume all future payments will be made?) and their costing of the loan hardly consistent (why write off the outstanding principal in the XIRR calc but keep it in the sale cost?) but they have at least explained what they do. Conclusion: read the small print. It's the same logic they use in their own XIRR. With the difference that if a loan defaults, then on SM at least it used to be that they write off the entire principal, but in return calc on your dashboard, they continue using same logic as for any overdue. You can't really write off overdue principal payments from cost. This would be putting the sales price there by Bondora, which I don't think any of use would want...
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