Performance of recovery process

I invested in new loans between November 2012 and December 2014. If all of my default balances are lost today and I just get cash back from other loans I would have an XIRR of 12.6% in GBP or 17% in EUR. Today I have either withdrawn already or have in cash in my account a little more money than the total amount I sent to Bondora. All of my loans are to Estonian borrowers and most started out at 60 month terms. If recovery rate is 30% my XIRR today would be 14.2% in GBP or 18.2% in EUR.

So yes, those who lent earlier than you and who stayed away from the non-Estonian markets could do quite well.

Yes. The one based in the UK have a good record of making money. And there are others, I just know the British ones best. It is easy to get 12% before bad debt on loans secured on buildings and land from some UK P2P places and other security or protection funds are often available. Because the lending is secured the losses will probably not be more than a few percent below the headline interest rates.

The UK options that I am using today were not available when I started to use Bondora, so Bondora has provided me with results I could not have easily obtained from UK P2P at that time.

Selling at this prices will slash my portfolio value in almost 50%...

What should I do regarding the ever increasing numbers of overdue and default loans? Most of my loans aren't mature and I have no idea if I should keep them or sell them...



These are pretty good returns, James! Do you think 2016's Estonian loans are worse than 2012-2014's?


I will check these P2P services if Bondora doesn't bleed me dry..

Since I last wrote, I started selling defaulted and overdue loans as well as some Current loans I had little confidence in.

Still, some of the current ones have gone overdue and some overdue have defaulted. So basically my portfolio has less current loans and, despite my best efforts, the value of defaulted and overdue loans continues to increase.

Any idea of what I should do?

Perhaps not worse in default rate but the interest rates are lower and that reduces the potential returns. One of the objectives that Bondora gave was lowering interest rates for borrowers in Estonia compared to other lending sources and they may have achieved that objective.

As you can see from the difference in my GBP and EUR returns I had to allow for exchange rate risk and that did work against me because of the timing. It is now more in my favour but maybe not for long enough with enough money to get my GBP results in line with the EUR ones before all loans reach the end of their normal term.

You need to carefully consider exchange rate risk when investing in GBP because the GBP is currently at quite low levels and may rise in the future compared to the Euro. But maybe not in a time that matters for you. Hard to predict!

Your loan book is quite new so it is not a surprise that the defaults continue to increase. They are highest at the start and after about a year to eighteen months the the rate of defaults tends to have dropped a lot.

If you want to reduce future defaults you can try to sell all loans in the higher risk bands, even if they are on time. You may be able to sell the ones that are on time at a profit. Depends on the country and other details of the loan. There is a secondary market trade history file that you can use to look up the sale prices of a loan in the past and that can give you some help in working out what price will work.

Public reports, the five reports are at the top, the description of the contents is below them.

You will need to combine the loan_id like 91593439-66bd-41f5-a34d-9ef701061fe8 from the secondary market data with the loan data set to get to the loan number and borrower ID for each secondary market transaction. You can make that faster by using only the funded loans from the loan data. You may also want to include only the successful sales from the secondary market data.

Sort the full list of loans by loan_id then you can use these formulas in Excel to get:

LoanNumber:  =INDEX(LoanData!B:B,MATCH(ResaleArchive!B2,LoanData!A:A))
BorrowerID: =INDEX(LoanData!H:H,MATCH(ResaleArchive!B2,LoanData!A:A))

LoanData is the spreadsheet page that has the sorted list of all completed loans from the loan dataset. Put those two formulas in extra columns in the page containing the completed secondary market transactions.

You will also often find that they are then listed for sale again at a higher price for a current loan. It is one of the ways in which Bondora does not treat lenders fairly. You can check more easily if you look at the secondary market online because the loan will usually be available there. You will find that it is only a few account which do this buying then reselling.

Bondora likes to pretend that it is realistic for a seller to check the loan every second and withdraw it from the market before it can be bought. Even checking every second isn't fast enough.

Maybe, but it also happened before the API.

And one of the reasons why I decided not to make more investments via Bondora.

A computer or person checking regularly can exploit many sellers of a loan where a payment is made but the sellers have to check for each loan and can only save the amount vulnerable to exploitation from one loan if they catch the change in status before the buyers do. That creates a drastic time-reward imbalance in favour of the buyers who can get a far larger gain from say 20 sellers who can each only save 1/20th of the amount the buyer can gain (assuming the loan sizes are the same for simplicity).