oldgrumpy
Member of DD Central
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Post by oldgrumpy on Mar 31, 2017 10:16:11 GMT
What a silly idea. Why on earth should i take any loss on a loan i am not involved in? I tend to agree with Dave here. However, I quote myself from another thread: My current calculations on the last seven months show an expected return around 6.5% and currently less than 6.6% with no leeway for defaults. I think 7% over the full year to August 2017 is going to be dreamland. Then the defaults .... (loans 1596/1597). Not crystallised losses yet, but if they do, that will be £160 out of net interest earned so far of £279 including accrued. That would bring achieved interest after fees and losses of about 2.8%, so I (and many others who have given BM a chance) will be watching VERY carefully.
My settings are at 1%.
BondMason elected to allocate two loans 1596 and 1597 to me both on the same day six months ago for the same amount and both have defaulted (my only defaults since last August).
Now, I ask myself, are both those loans to the same borrower? If so, it's pretty silly (and annoying) to tell me I will get allocated 1% of my cash to a loan and then give another 1% to the same borrower which makes 2% which I did not request.
When you've got a mo stevefindlay could you tell us whether those two loans are to the same (corporate) defaulter, and what the position is for recovery? I don't want to lose a double dose. 
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Post by stevefindlay on Mar 31, 2017 20:57:44 GMT
Steve has already indicated a 0.5% diversification setting is coming. Not checked to see if it is in place yet... It's not. In testing... This will be released in two steps: Step 1: certain types of loans will have a maximum of 0.5% for all clients. E. G. Invoice discounting. This is looking good for release next week. Whilst some carefully used invoice discounting can be good, I (we) are very disappointed / fed up with how the odd default can manifest itself as a horror show for some clients. E. G. A 2% default in their first few months with us. And it's sad to report that this has happened in a handful of cases. And this upsets me. Which is why the 0.5% setting for all Invoice Discounting has been made a priority for development (e.g.over monthly interest withdrawal). Step 2: clients can choose a maximum of 0.5% for everything if they choose.
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Post by stevefindlay on Mar 31, 2017 21:13:26 GMT
I tend to agree with Dave here. However, I quote myself from another thread: My current calculations on the last seven months show an expected return around 6.5% and currently less than 6.6% with no leeway for defaults. I think 7% over the full year to August 2017 is going to be dreamland. Then the defaults .... (loans 1596/1597). Not crystallised losses yet, but if they do, that will be £160 out of net interest earned so far of £279 including accrued. That would bring achieved interest after fees and losses of about 2.8%, so I (and many others who have given BM a chance) will be watching VERY carefully.
My settings are at 1%.
BondMason elected to allocate two loans 1596 and 1597 to me both on the same day six months ago for the same amount and both have defaulted (my only defaults since last August).
Now, I ask myself, are both those loans to the same borrower? If so, it's pretty silly (and annoying) to tell me I will get allocated 1% of my cash to a loan and then give another 1% to the same borrower which makes 2% which I did not request.
When you've got a mo stevefindlay could you tell us whether those two loans are to the same (corporate) defaulter, and what the position is for recovery? I don't want to lose a double dose.
Sorry for not replying earlier to this post. We ARE aware of a very limited number of instances where loans weren't linked correctly as connected loans. This IS the case with 1596 and 1597. Although they are technically slightly different - it is Invoice Discount finance with the same borrower but different underlying customers (hence why the concatenation of the borrower name and customer name were different and the importer didn't spot this) - in our opinion the flavour of the risk is that these are indeed related. We will stand behind any client that has duplicated risk here: we have £1,100 in total in 1596 and £890 in total 1597. If these defaults turn into Crystallised losses, then no client will suffer more than their concentration setting at the time of the original loan allocation. It may be that these loans may yet have different outcomes, which is why we are in a holding pattern until these are resolved. Further updates will follow in due course. In the meat time, please ask if you would like further details on this, or if you have any concerns over any other loan references: invest@bondmason.com
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Post by stevefindlay on Mar 31, 2017 21:15:11 GMT
I don't believe BM will have any control over recovery of loans and that will be down to each individual platform where BM invest our money, remember BM is the middle man here hand picking loans on our behalf They will have no control over the recovery, but it will show how good they are at picking the right loans, even when things do not go as planned. Although we can't control recovery specifically, we look very dimly upon defaults. This is communicated effectively and clearly with platforms, particularly where there are outstanding defaults.
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Post by stevefindlay on Mar 31, 2017 21:16:31 GMT
Loan reference 1532 "This is the fifth such loan with this debtor, whilst the other four fully repaid, the debtor then entered into difficulties, their company went into administration and has since been bought out of administration. We are yet to receive the administrators report which will set out the final position". Has there been any further progress on this default stevefindlay ? Not yet sadly. We understand a legal process is underway.
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Post by stevefindlay on Mar 31, 2017 21:21:32 GMT
Sharing losses
There are some comments above with respect to this, with differing views.
I can see the attractiveness of this, however it is likely it would then lead to our scheme being defined as a Collective Investment Scheme which would either (or both) restrict the scheme to High Net Worth and Sophisticated Investor etc; and require investors to be tied in to a fixed term. Neither of which are appealing.
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amphoria
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Post by amphoria on Apr 3, 2017 16:49:58 GMT
Across the platform 18 out of the 19 defaulted loans are invoice discount finance (out of 1,675+ overall). Whilst this isn't an unexpected proportion of the total, and 11 out of 18 have since fully repaid, we aim for BondMason to be at the more conservative end of the market and this doesn't sit comfortably with us. Therefore: - We are reducing our exposure to Invoice Discount finance across the platform
(to less than 20% by value) - We are reducing the maximum exposure any client has to a single piece of Invoice Discount finance (to 50% of their concentration setting) - i.e. max 1% for a "2% client"; and max 0.5% for a "1% client
"* - We have revised our loan acquisition criteria for those platform
s
*This change will be rolled out in the next week or so. This change does not appear to have been rolled out yet as today and last week I picked up individual invoice discount loans at my 1% setting, ie. not 0.5%. It appears that this change has now been implemented as today I picked up some invoice discounting loans at 0.5%.
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nairda
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Post by nairda on Apr 4, 2017 16:56:15 GMT
This change does not appear to have been rolled out yet as today and last week I picked up individual invoice discount loans at my 1% setting, ie. not 0.5%. It appears that this change has now been implemented as today I picked up some invoice discounting loans at 0.5%. I had some at 0.5% yesterday but today I have picked one up at 1%.
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Post by stevefindlay on Apr 4, 2017 17:22:11 GMT
The reduced investment concentration setting has been implemented for Invoice Discounting loans (as some have identified). This works in the following way:
- max half of your concentration in the significant majority of Invoice Discount loans: 2% goes to 1% and 1% goes to 0.5%
- some platforms have a 0.5% max for all of their Invoice Discount loans
- some loans (very few - 1 or 2 out of every 100 or so) are tagged at 1%
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Post by stevefindlay on Apr 4, 2017 17:30:51 GMT
4 April 2016 - New crystallised loss
I am sad to report we have now had our 3rd crystallised loss (out of 2,500+ loans to date). This was another Invoice Discount loan and the loss was £4,533 (<0.05% of funds outstanding).
However, as this loan pre-dates the reduction in the Invoice Discount concentration setting, some clients have seen a 2% write-off. I've checked the account of every client effected (it impacts about 8% of our client base by number), and although no client is in negative territory (i.e. all effected clients still have a positive return with BondMason after any other losses, fees etc), this still hurts us.
There are a couple of other Invoice Discount loans that are in default that I am concerned about. We can't share details yet, but will provide further updates as soon as we have them. (NB: there are also some loans in default which are now beginning to see recovery - so it can work both ways).
We continue to do all we can to protect client capital - and unfortunately losses are part of the risk-return trade-off. But it doesn't mean we have to like them.
If you have any questions or concern, please ask: invest@bondmason.com | 020 3126 6705
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shuff27
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Post by shuff27 on Apr 5, 2017 6:44:12 GMT
The total amount of my 5 defaults is now higher than my total net gain. stevefindlay - how concerned should I be about this? My account doesn't yet show any crystallised losses - does that mean there's still a chance some/all of those defaults can be recovered? Finally, as the defaults are all invoice discounting - should you be in this type of lending as it seems disproportionately risky? |
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Post by Deleted on Apr 5, 2017 10:49:53 GMT
I would also be interested to see a harder look taken at the usefulness of some of the invoice discounting loans. I see a few come up at about 6% return - perhaps these are less risky for some reason? Otherwise it doesn't seem a sensible risk/reward at all.
To be honest, in a portfolio of say 100 receivables, I would expect to have a few defaults based on my past experience (on other platforms), but of those I would expect only 1 to become a loss in the end.
At this point I've decided to just leave everything as it is for one year from the date of deposit, then evaluate the returns and make a decision then.
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keystone
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Post by keystone on Apr 5, 2017 14:13:36 GMT
4 April 2016 - New crystallised lossI am sad to report we have now had our 3rd crystallised loss (out of 2,500+ loans to date). This was another Invoice Discount loan and the loss was £4,533 (<0.05% of funds outstanding). However, as this loan pre-dates the reduction in the Invoice Discount concentration setting, some clients have seen a 2% write-off. I've checked the account of every client effected (it impacts about 8% of our client base by number), and although no client is in negative territory (i.e. all effected clients still have a positive return with BondMason after any other losses, fees etc), this still hurts us. There are a couple of other Invoice Discount loans that are in default that I am concerned about. We can't share details yet, but will provide further updates as soon as we have them. (NB: there are also some loans in default which are now beginning to see recovery - so it can work both ways). We continue to do all we can to protect client capital - and unfortunately losses are part of the risk-return trade-off. But it doesn't mean we have to like them. If you have any questions or concern, please ask: invest@bondmason.com | 020 3126 6705 After the long cash drag saga, no surprise, I am in this crystallised loss as well! The other 3 I have in default are all over 3 months overdue! Plus, because 2 of them were allocated after I had a small amount of interest and hence allocation was rounded up I actually have a 3% concentration of my investment at that time each in these defaults. If they go on to crystallised losses that will be 10% loss. I have had interest so it will be around 4% loss overall. Now, having checked my investments I see another 4 loans are overdue but not in default, so that will be another 10% if they go the same way. Is the 7% target meant to be the level of losses? Don't bother answering, I'm going to check the other platforms. Ratesetter rolling @3% is looking more and more like I hit the jackpot!
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Post by stevefindlay on Apr 5, 2017 21:02:27 GMT
The total amount of my 5 defaults is now higher than my total net gain. stevefindlay - how concerned should I be about this? My account doesn't yet show any crystallised losses - does that mean there's still a chance some/all of those defaults can be recovered? Finally, as the defaults are all invoice discounting - should you be in this type of lending as it seems disproportionately risky? (1) Not all defaults go into crystallised losses. It's approximately 10% to date. (2) Invoice discounting has a higher risk-return profile. Net-net it can still be an attractive form of investment, but it's quickly becoming apparent that our clients would like a less volatile ride - so we are reducing its usage across the platform.
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Post by stevefindlay on Apr 5, 2017 21:03:43 GMT
I would also be interested to see a harder look taken at the usefulness of some of the invoice discounting loans. I see a few come up at about 6% return - perhaps these are less risky for some reason? Otherwise it doesn't seem a sensible risk/reward at all. To be honest, in a portfolio of say 100 receivables, I would expect to have a few defaults based on my past experience (on other platforms), but of those I would expect only 1 to become a loss in the end. At this point I've decided to just leave everything as it is for one year from the date of deposit, then evaluate the returns and make a decision then. The 6% ones are either (i) net return after a provision fund or (ii) a government-backed invoice.
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