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Post by batchoy on Jun 12, 2014 9:03:53 GMT
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merlin
Minor shareholder in Assetz and many other companies.
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Post by merlin on Jun 12, 2014 9:45:48 GMT
Thanks Andrew, but a followup question; are there any rules determining how you are allowed to pursue guarantors? Would you be allowed to go after the "easiest target" for 100% or do you need to make a reasonable attempt to recover from all guarantors equally before going after any one of them (and who decides what's reasonable)? I think this is a critical point. A recent default on TC is causing problems because the PG is not callable until it is prooved there is nothing left in the company even though it's allready clear there is much less left in the company than is still owing. So the final recovery could take ages. A quick perusal of the Funding Circle forum on this site will provide some indication of the true worth of PG's. Also it is worth taking a look at FC's stats with particular attention to the ratio of total recoveries to total defaults, which is about 1 in 5. IMO not very reassuring to lenders! Even in the best situations with quality, tangible assets backing a loan it can still take an awful long time to recover debts - two to three years not being unusual. Just ask Andrew as he has specialised in this type of recovery problem.
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j
Member of DD Central
Penguins are very misunderstood!
Posts: 2,188
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Post by j on Jun 22, 2014 22:01:12 GMT
Looking at what's happening on auction 70 currently, it brings to the fore the real tightness of controlling/watching physically removable stock. I won't intimate details of auction 70 for those unaware as I'll probably get told off by moderators (you can easily google it) but it serves as a reminder that at the correct ltv, bricks & mortar is better.
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Post by Ton ⓉⓞⓃ on Jul 24, 2014 19:52:45 GMT
The second tranche of this is now in preview, quick drwndown suggested. First loan thread Here |
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Post by cyrilmadrid on Jul 24, 2014 21:40:14 GMT
From what the credit report says, this new tranche will rank at the same level as the first tranche, therefore holders of the first tranche will see their position retrospectively weaken as indebtedness increases. It would have been fairer for the second tranche to stand behind the first tranche.
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mikes1531
Member of DD Central
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Post by mikes1531 on Jul 24, 2014 22:05:59 GMT
From what the credit report says, this new tranche will rank at the same level as the first tranche, therefore holders of the first tranche will see their position retrospectively weaken as indebtedness increases. It would have been fairer for the second tranche to stand behind the first tranche. Yes, indeed -- my thoughts exactly. That's what was done with the two existing tranches of the Gr*** De** Bo**** In*******. (Tranche 4 ranks behind Tranche 3.) To do otherwise degrades the position of the first tranche lenders -- apparently without consulting them and gaining their approval. On other loans, AC have indicated they ask borrowers to provide a 'negative pledge' -- or words to that effect -- which commits the borrower to not take out any further borrowing that would make the AC lending less secure. Did they not do that for the first tranche? Or might the negative pledge be overrideable with AC's permission, and they've given that permission in this case because they want the second tranche to be saleable? It still seems very detrimental to first tranche lenders. ... of which there seem to be rather few happy ones, inasmuch as just over half of Tranche 1 still is in the hands of the underwriters, and 73% of the loan is on the Aftermarket. Since it would appear that the borrowing of Tranche 2 would weaken the security position, it's surprising to me that the interest rate still is set at 9%. And if the underwriters still are having trouble exiting from Tranche 1, are there going to be any underwriters eager to sign up for Tranche 2?
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Post by pepperpot on Jul 24, 2014 22:17:47 GMT
The two tranches ranking equally was made clear in the first credit report, so holders of the first tranche can't really complain as nothing has changed.
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unmadem
Member of DD Central
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Post by unmadem on Jul 25, 2014 12:59:13 GMT
I see there are some bids in for tranche 2. Not quite sure why you would do this and tie up your money waiting for drawdown rather than just buying some of tranche 1 on the AM and get interest immediately. Personally I am not interested in either tranche but it is curious.
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mikes1531
Member of DD Central
Posts: 6,453
Likes: 2,320
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Post by mikes1531 on Jul 25, 2014 14:10:43 GMT
I see there are some bids in for tranche 2. Not quite sure why you would do this and tie up your money waiting for drawdown rather than just buying some of tranche 1 on the AM and get interest immediately. Personally I am not interested in either tranche but it is curious. I wondered the same thing myself, especially as the security is the same in both cases. Then again, the Tranche 2 bids are small and few -- a grand total of £512 from six bidders right now -- and they all resulted from pre-bids. I'd guess they have come from inexperienced AC lenders. Perhaps they weren't aware that there were Tranche 1 units for sale in the Aftermarket at the time they placed their bids. I really don't understand why AC have gone through the usual process for this loan. I expect that very few bids will be received for the reasons noted above, and a very large amount of underwriting will be required. Why not just arrange the underwriting in advance, and either skip the 'auction' process completely, or have a very short auction -- as they've done in the past where a borrower needed a very quick drawdown? (Look at the bids for Ang***** Br******.) Maybe it's just a cosmetic exercise, so visitors to the website see more active auctions. Or maybe it's a dry run for Tranche 2 of Mi****** Tr*** Fi***** Pr****** which is scheduled to draw down next month. (That's going to be a similar situation, as I'd be very surprised if all of the £760k of underwriter units for sale on the Aftermarket now have been taken up by the time Tranche 2 goes live.) While thinking about MTFP, I noted that Tranche 1 is shown as being 80% LTV, and that all the tranches are equally ranked. Are there going to be further debentures against additional assets?
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Post by cyrilmadrid on Jul 26, 2014 7:47:05 GMT
Surprisingly, I was able to sell most of my exposure to tranche 1 within seconds, in spite of the queue. Maybe because I had non standard units ? -different amounts-
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Post by Ton ⓉⓞⓃ on Jul 26, 2014 9:42:53 GMT
Someone was asking why are Lenders putting in bids on the 2nd tranche when the first is still on the AM. One of my reasons is when there are several tranches for an eBorrower, it's nice to split your exposure if it's all on the same charge, so that if the Borrower is late with repayment you can always sell the other tranche, but having typed it out I'm now thinking that AC might remove all tranches from sale if a borrower misses the payment from one tranche... Thought I was being so clever there.
Has this come across this question before, anyone know the answer? Perhaps after the weekend I'll ask chris.
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Post by chris on Jul 26, 2014 11:51:20 GMT
Currently the tranches are treated as separate loans, so your clever strategy would work. However that may be changing in the mid term, there's talk within the business of officially supporting loan tranches.
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mikes1531
Member of DD Central
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Post by mikes1531 on Nov 13, 2014 18:25:41 GMT
We have an interesting development in the Aftermarket for this loan. As I write this, according to the AC website... On the various tables of loans, the same amount is shown as "Units Available". chris or andrewholgate: Can someone please explain how 113% of the amount of this loan can be up for sale at once? (It started as a £500k loan, but there's only £475,966.42 of capital remaining.) I thought only the Bank of England was allowed to print money!  |
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