merlin
Minor shareholder in Assetz and many other companies.
Posts: 902 
Likes: 302
|
Post by merlin on May 20, 2014 13:33:27 GMT
Not much to excite on FC after a rash of new loans last month hitting something like 120 current at one stage and now scraping 50 and less at times. Associated to this is most loans ending very near MBR and very little to excite. All this is very reminiscent of the state of play around this time last year, culminating in FC shoving up MBR's and then bringing them down again. Wonder what they will do this year to liven up the market?
|
|
fasty
Member of DD Central
Posts: 1,038
Likes: 388
|
Post by fasty on May 20, 2014 15:42:27 GMT
It's curious that the number of active loans has been hovering very close to 50 for some time. I wondered whether the number of active loans was being deliberately throttled in order to moderate rates and avoid some of the craziness we saw a few weeks ago?
|
|
|
|
Post by aloanatlast on May 20, 2014 18:23:43 GMT
They blamed it on Easter, but Easter started unexpectedly early and seems to be dragging on for ever.
Not having much effect on the secondary market though. Even though the flippers aren't adding much new stuff to the heap, apart from the property.
Of course a lot of the loan parts on sale at high rates can't be priced at lower rates because of the 3% premium cap.
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on May 22, 2014 22:40:02 GMT
It seems clear that the number of loans has been throttled back after the failure to fund the 100 plus a week in early spring at sustainable rates. But I think the whole loans trial is now going well. There are about 20 in the loan book and so for the month it will be 40-50 when worked through. So maybe up to 20% will be going that way. We do not know how many are rejected by the whole lenders and land on the normal market, but it cannot be too many because the number of whole loan actions in progress is never a high percentage of the total - currently four out of 62.
So FC may well be able to dynamically adjust the number of whole loans to keep the number of normal loans balanced with the available funds, which I think preferable to the lurches we have seen in favour of Borrowers last year and lenders early this year. I do not think we are back to last summer. Rates are higher and more sustainable - not far off the MBR that FC tried to impose last June. We can get good rates on the larger loans.
FC may now be in a position to go for growth without the lurch in one direction or the other, underpinned by MBR on one side and the safety valve of whole loans on the other. (I hope).
|
|
is
Posts: 108
Likes: 14
|
Post by is on May 23, 2014 11:14:29 GMT
On the topic of whole loans, it would be good if FC allowed the splitting of loan parts - I would be happy to bid for whole loans but not if I had to place £150k chunks in the market later. What Assetz do (automatic split of bids into £100 units) is a lot better, I think.
|
|
|
|
Post by GSV3MIaC on May 23, 2014 18:43:14 GMT
That would certainly unload the server somewhat, as would allowing multi-bids .. I.e. instead of £x at y%, accept a bid of z parts each at £x at y%. Splitting parts only when sold would also keep the transactions and rounding under control for longer. But I think the whole point of whole loans is that they are not flippable - no secondary market at all, AFAIK?
|
|
wysiati
Member of DD Central
Posts: 397
Likes: 86
|
Post by wysiati on May 23, 2014 19:46:00 GMT
But I think the whole point of whole loans is that they are not flippable - no secondary market at all, AFAIK? That is correct. No secondary market for whole loans as things stand so pure 'lend & hold'.
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on May 23, 2014 22:12:24 GMT
But I think the whole point of whole loans is that they are not flippable - no secondary market at all, AFAIK? That is correct. No secondary market for whole loans as things stand so pure 'lend & hold'. And so it should stay. The idea of the whole loans was to bring in new sources of cash from different types of lender. If they are allowed to divide and flip then the loans will end up with the existing lenders, at a lower buyer rate, and the new money will simply be recycled rather than accumulating in the loan book. Where is the purpose in that?
|
|
wysiati
Member of DD Central
Posts: 397
Likes: 86
|
Post by wysiati on May 23, 2014 22:39:02 GMT
That is correct. No secondary market for whole loans as things stand so pure 'lend & hold'. And so it should stay. The idea of the whole loans was to bring in new sources of cash from different types of lender. If they are allowed to divide and flip then the loans will end up with the existing lenders, at a lower buyer rate, and the new money will simply be recycled rather than accumulating in the loan book. Where is the purpose in that? If anything institutional investors should be more attuned to the risks of holding selected credit assets under given economic conditions. Liquidity constraints are a real risk for institutional investors as well so I would expect to see pressure for the development of active secondary markets for whole loans. These may develop as parallel markets to the existing partial loans markets (rather than these being intermingled) or you may see the creation of the equivalent of 'dark pools' of liquidity as seen with stocks.
|
|
is
Posts: 108
Likes: 14
|
Post by is on May 24, 2014 0:14:54 GMT
Not many institutionals would be happy to buy a totally illiquid asset, indeed many would not be allowed to invest in such. Sales, including partial sales, are needed for a number of reasons, fund redemptions for example.
The advantage of a single rather than separate market is in increased liquidity for all. Lets see which way FC goes; it seems Assetz is more proactive there, with zero sales fee and automatic splitting.
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on May 24, 2014 7:05:17 GMT
Not many institutionals would be happy to buy a totally illiquid asset, indeed many would not be allowed to invest in such. Sales, including partial sales, are needed for a number of reasons, fund redemptions for example. The advantage of a single rather than separate market is in increased liquidity for all. Lets see which way FC goes; it seems Assetz is more proactive there, with zero sales fee and automatic splitting. Is not normal bank lending to business totally illiquid? Is not the trial totally illiquid? Subject to a maximum term of five years. I assumed that FC would trial what they intended to be the substantive service. If certain loans are reserved in full for the first option at a fixed rate for a class of lenders who have registered as whole loan purchasers, and then those purchasers are allowed to split ther loans and sell them for profit to the mass of ordinary lenders, then that seems a straightforward preferential treatment. The same effect could be achieved by removing the maximum bid limit and allowing everyone to split their loan parts. But I can see why you wish to make the case, 'is'.
|
|
is
Posts: 108
Likes: 14
|
Post by is on May 24, 2014 8:28:33 GMT
Not many institutionals would be happy to buy a totally illiquid asset, indeed many would not be allowed to invest in such. Sales, including partial sales, are needed for a number of reasons, fund redemptions for example. The advantage of a single rather than separate market is in increased liquidity for all. Lets see which way FC goes; it seems Assetz is more proactive there, with zero sales fee and automatic splitting. Is not normal bank lending to business totally illiquid? Is not the trial totally illiquid? Subject to a maximum term of five years. I assumed that FC would trial what they intended to be the substantive service. If certain loans are reserved in full for the first option at a fixed rate for a class of lenders who have registered as whole loan purchasers, and then those purchasers are allowed to split ther loans and sell them for profit to the mass of ordinary lenders, then that seems a straightforward preferential treatment. The same effect could be achieved by removing the maximum bid limit and allowing everyone to split their loan parts. But I can see why you wish to make the case, 'is'. High proportion of the lending is securitised and sold off to institutional investors (funds, insurance companies etc). Asset backed securities of various forms are a major asset class and are backed by many things - mortgages, auto loans, credit card debt etc. The liquidity is what draws the institutionals, along with easier market access (direct loan portfolio investment is rare) I don't see the preferential treatment if all are allowed to bid for whole loans. It is simply easier to place larger investments that way (at the moment, even placing 50k takes an awful lot of clicks with FC if you ever want to have a chance to sell)
|
|
|
|
Post by davee39 on May 24, 2014 9:34:21 GMT
Buying a whole loan, splitting and then flipping would be highly disruptive to FC and the marketplace. The deal is aimed at institutions and Individuals happy to trade among themselves. Ultimately the splitting will occur off the FC market as the loans are packaged and re-sold. This transforms FC into a 'front office' introducer for businesses, the finance people then take the loans, bundle, split, wash and otherwise adulterate to create shiny new market opportunities elsewhere. Ultimately, once all the bonuses are paid, the nice 9 - 14% returns are 4% to you sir, and please take all the risk.
|
|
wysiati
Member of DD Central
Posts: 397
Likes: 86
|
Post by wysiati on May 24, 2014 17:27:40 GMT
Not many institutionals would be happy to buy a totally illiquid asset, indeed many would not be allowed to invest in such. Sales, including partial sales, are needed for a number of reasons, fund redemptions for example. Wait a little longer and you should see some announcements which demonstrate that there is the appetite for institutional investment in P2P generally even with the absence of any secondary market mechanism. It is however, acknowledged as a risk. Whether the issue of fund redemptions arises depends upon the structure of the investment vehicle - i.e. they can be 'closed-end'.
|
|
|
|
Post by GSV3MIaC on May 24, 2014 17:41:51 GMT
So at what point does 'institutional investment' become completely incompatible with 'P2P', and 'are we nearly there yet'?
|
|
