oldgrumpy
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Post by oldgrumpy on Apr 5, 2017 18:31:42 GMT
I wonder where these rank if there are defaults. Given the lower rate, perhaps that means preference in getting back full capital/interest over direct investors. That wouldn't be good for the direct investors. I wonder if that will eventually mean that bond holders have the first charge, while direct investors, i.e. we have a second charge on the recoveries from loans which default.
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twoheads
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Post by twoheads on Apr 5, 2017 18:50:26 GMT
Earlier in this thread I expressed a worry that the 'bond' fund could have priority access to the SM (i.e. if the bond fund needed some value then loan part sales could be snapped up by the bond fund without appearing on the SM).
There were a couple of replies suggesting that the 'bond' would use a different set of assets (lower risk, not offered to direct LfSS lenders). If this is the case then many of the worries are unfounded.
However, I do not think it is clear whether the bonds will use separate and distinct set of assets or whether it will compete with us (with an 'insider' advantage) for the best stuff.
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Apr 5, 2017 19:18:30 GMT
Earlier in this thread I expressed a worry that the 'bond' fund could have priority access to the SM (i.e. if the bond fund needed some value then loan part sales could be snapped up by the bond fund without appearing on the SM).
There were a couple of replies suggesting that the 'bond' would use a different set of assets (lower risk, not offered to direct LfSS lenders). If this is the case then many of the worries are unfounded.
However, I do not think it is clear whether the bonds will use separate and distinct set of assets or whether it will compete with us (with an 'insider' advantage) for the best stuff. Reading the prospectus, which may or may not be the prospectus, it appears the bonds will invest the same way as a normal investor in the range of loans offered or through the 'highly liquid' SM. No evidence of any prefential treatment for loans or defaults.
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Post by lendinglawyer on Apr 5, 2017 19:22:24 GMT
I imagine all will become clear when the offer docs for the bonds are available. No use speculating now. One thing is for sure they can't just make this holder rank senior in the current deals if it buys on the SM. They could of course structure things differently in future (creating two tranches to reduce the overall cost for the borrower - cheaper senior tranche providdd via bonds and expensive junior tranche provided by direct investors) and the "insider" point is founded (although you'd be paying a hefty sum for the insider help!) as is the auto buying on SM point I also read above. This is a real dumb question (sorry! But I've only ever held shares or fund interests...), but are bonds eligible to be held in an isa? If so I'll at least consider once more details are available. ilmoro: where did you get the prospectus please? |
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twoheads
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Post by twoheads on Apr 5, 2017 19:27:43 GMT
Reading the prospectus, which may or may not be the prospectus, it appears the bonds will invest the same way as a normal investor in the range of loans offered or through the 'highly liquid' SM. No evidence of any prefential treatment for loans or defaults. So, maybe LfSS bonds will be investing in the same assets - using the 'highly liquid SM'. This is what I expect.
As shirehorse points out and as I have also pointed out, they will mitigate the risk by managing the bond fund in much the same way as many investors on this forum seem to: sell shorter term stuff and buy into longer term.
Do you think that the SS bond fund manager(s) would not have preferential treatment on the SM? Would they be on the forum monitoring the feedback in an effort to ascertain the important loan information which we are not given? Will they be complaining about bloody recaptures to make SM purchases and the like?
Answers on a postcard to LfSS towers please.
EDIT: Crossed with lendinglawyer but I think that speculation is fun; it throws up ideas, questions and makes one think about possible futures.
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Apr 5, 2017 19:32:07 GMT
See the link in my post on first page.
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jomantha
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Post by jomantha on Apr 7, 2017 9:24:55 GMT
Perhaps this is instead of them doing an IFISA - which I suspect would be at this type of rate 5%. You can get a 2 year bond with Dolphin Trust (asset backed, 20 year track record) paying 10% interest paid every 6 months - or even 5 year interest paid at term 12% pa. I'd like to know more about this
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Post by jackpease on Apr 7, 2017 9:34:04 GMT
This will make a complex financial area even more complex - complexity is the enemy of transparency and valuing risk, as we know from sub prime, and look where that got us.
This may or may not be a good idea - I think I am a lone voice in thinking that SS is a business and must chase the lowest rate that it feels investors will settle for (ordinary investors' actual money - not forumites stated opinions!) - but a few months back Wellesley had a wobble and during that wobble those that had gone for their bonds suddenly realised quite where they stood in terms of risk and were sweating buckets as they realised they were right at the bottom of the pile if things went pop.
Jack P
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Post by spareafewcoppersguv on Apr 7, 2017 10:00:20 GMT
Perhaps this is instead of them doing an IFISA - which I suspect would be at this type of rate 5%. You can get a 2 year bond with Dolphin Trust (asset backed, 20 year track record) paying 10% interest paid every 6 months - or even 5 year interest paid at term 12% pa. I'd like to know more about this Just do a Google search....
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Balder
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Post by Balder on Apr 7, 2017 10:16:28 GMT
I'd like to know more about this Just do a Google search.... sippclub.com
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