Seems to be updated wording indeed.
Two small issues with this part:
a) Payment schedule of defaulted loan is invalid and all payments are supposed to be paid by yesterday. In short, there are no future scheduled principal payments for defaulted loans, they're all due since the day of default. Both legally AND in Bondora's system AND in regards to fees paid to DCAs and so on and so on.
b) Assuming that a defaulted loan is worth it's "future principal payments", is so fairy land optimistic and incorrect that it actually hurts to even read.
Here are some nice stats and graphs showing how much those loans have actually been worth, as in what their actual present market value is:
bondpicking.com/market-defaulted.phpMore precise values can be gained from the Secondary Market dataset, but I think it's pretty clear even from these graphs that almost at no point in time is the value of a defaulted loan even close to 90%+, as is considered in the XIRR calculation for a long long time after default.
Same is also clear when you look at Bondora Rating's assumptions for Expected Loss and recovery rates. Rating is not even close to as optimistic as XIRR for the first 2+ years on average after default. One of them has to be incorrect in the assumptions...
Same thing.
a) Overdue payments are not written off immediately, but very slowly and gradually on average over 3+ years' time. All of defaulted loan is overdue.
b) The present value part we also covered already, but it's worth mentioning again. By assuming essentially full principal as present value for defaulted loans, you are making an assumption for future losses of roughly zero and a bit less, because the recovery would have to be full and instantaneous to achieve the calculated XIRR.
Is this a recommendation to take a loan to invest at Bondora?
No! You would NOT break-even if you look at your XIRR calculation with a non-mature portfolio and your interest rate is lower than this fresh XIRR that considers the present value of your defaulted loans to be 95%+. There'll never be this good recovery to actually achieve anything close to this and even if there would be, DCAs would take their part away and it still wouldn't happen. Plus it will take time to recover and the time value of money would mean your XIRR actually will be lower than it is today.
Even with a mature portfolio today, historical XIRR means nothing about future return, so my XIRR of 27% doesn't mean that I'd earn profit by taking a 20% loan to invest with Bondora. Even your own Expected Return says that MAXIMUM return to expect with the very riskiest loans is roughly 20%. Just because I had some nice loans in the past that earned very nice profits (and just because Bondora has created some marketing videos ignoring the return ceiling of loans issued today), doesn't mean that I'll be making profit by investing with money from costly loans in the future.
This comment couldn't be more misleading if it wore a wig and tried to really really hard.
...
But this wasn't actually what I wanted to say. I just wanted to highlight this pearl of investment wisdom from the blog post for everyone to consider for discussion:
Which loans do you think have the nicest blends of rates and risks?
