fp
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Post by fp on Jun 16, 2017 12:07:42 GMT
Or make development tranches a second charge, bringing a different level of risk/reward into play
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star dust
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Post by star dust on Jun 16, 2017 12:10:15 GMT
Thanks for the response Gordon While I appreciate that the higher rate for Dev tranches has been mentioned on this forum, this wasn't until after the loan had filled. A cashback incentive helps fill a tranche and I am very much supportive of them, but differing interest rates for the same risk means that existing investors lose out I along with other investors invested in this loan on the full understanding that it is a development loan with further tranches - by offering a higher rate to later investors you distort the secondary market, effectively creating a lower tranche effect on the original investors. I would strongly encourage you to offer the incentive to fill this loan as some form of cashback in order to not distort future secondary market trading and maintain confidence in primary market initial tranche investment. Obviously cashback vs interest rate has a cashflow impact, so maybe you could offer cashback payable upon final repayment of the loan at end of term, and not transferable to future purchasors to keep the SM fair Either that or rank the tranches behind the original loan, with the higher interest rate to reflect that. Some people will still buy into those, and others may prefer the 'less risky' original 12%.
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Post by akihisafumihiro on Jun 16, 2017 12:13:05 GMT
How about making it simple and give everyone 14%
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SteveT
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Post by SteveT on Jun 16, 2017 12:15:26 GMT
If the tranches are to rank equally in terms of security then they must carry the same % rate, else the earlier (lower rate) tranche lenders effectively are locked in with parts that will never sell.
Either later, higher rate tranches should rank behind the earlier, lower rate one (which would be the normal approach on a platform such as Funding Secure), or else a different form of incentive (eg. cashback) should be used to fill the later tranches at the same rate (as Funding Circle used to do).
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Post by Collateral Rep on Jun 16, 2017 12:48:49 GMT
Hi,
After internal discussions including legals and taking our investors comments into consideration, we have decided to rank all development loans behind the initial loan BL00026.
We hope this alleviates any concerns investors may have.
Many thanks,
Gordon
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metoo
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Post by metoo on Jun 16, 2017 13:28:19 GMT
Collateral have been keen to listen to investors which is impressive. I was just about to post a minority view explaining why I thought the 14% was fair on later tranches ranked equally with the first that received cashback.
I'll have to look carefully at the risk now before deciding whether 14% gives enough compensation! What forumites have just negotiated is a lower LTV risk for those who took 12% pa + 4% CB, and are helping them to sell on! Perhaps I'll be buying the 12% stock instead of the 14% despite boosting returns for the BHs!
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elliotn
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Post by elliotn on Jun 16, 2017 13:55:21 GMT
Collateral have been keen to listen to investors which is impressive. I was just about to post a minority view explaining why I thought the 14% was fair on later tranches ranked equally with the first that received cashback. I'll have to look carefully at the risk now before deciding whether 14% gives enough compensation! What forumites have just negotiated is a lower LTV risk for those who took 12% pa + 4% CB, and are helping them to sell on! Perhaps I'll be buying the 12% stock instead of the 14% despite boosting returns for the BHs! Yep, won't touch the development tranches now, have ample 14% 1C on Col already (and enough student developments generally).
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elliotn
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Post by elliotn on Jun 16, 2017 13:58:35 GMT
for mere mortals the cashback was 0.25% rather than 4%, so nothing to get too fussed about. BHs will hold most, get over 16% (pa) and the safest tranche, not a bad day's work!
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oldgrumpy
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Post by oldgrumpy on Jun 16, 2017 13:59:46 GMT
I hope there will be enough new investor money forthcoming to fill the development tranches as they are launched. I don't want Collateral platform to fall on its face because of faltering resources.
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Post by akihisafumihiro on Jun 16, 2017 15:46:07 GMT
draw down today?
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Post by lendinglawyer on Jun 16, 2017 15:48:43 GMT
Is this still drawing down today or have the future tranche questions caused a delay?
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Post by Collateral Rep on Jun 16, 2017 16:15:26 GMT
Hi lendinglawyer, Unfortunately it doesn't look like it, we've done everything we can our end but not quite got there with the legals. It had nothing to do with the further tranches, those loans are ready and waiting to go but need the first loan drawn down before we can list them. Apologies, but it looks like Monday. Gordon
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wysiati
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Post by wysiati on Jun 16, 2017 16:48:27 GMT
I hope there will be enough new investor money forthcoming to fill the development tranches as they are launched. I don't want Collateral platform to fall on its face because of faltering resources. For those in particular who did not participate in the initial loan and did not benefit from the cashback on the stronger security proposition there is now more of an incentive to hold off and see whether further cashback incentives will be required to fill those development tranches.
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Post by Collateral Rep on Jun 16, 2017 16:54:40 GMT
Hi wysiati, There won't be any further cash back being offered on the development loans as we are already offering an increased interest rate of 14%. Many thanks, Gordon
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withnell
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Post by withnell on Jun 16, 2017 17:55:43 GMT
Liquidity from where exactly? Flowing with bold ambition against an 'ebb' tide. Not so sure I agree with this - there's clearly a massive liquidity issue on Lendy, but I wouldn't say the same exists on Collateral - clearly a number of platforms have released a number of high value loans all together, and it takes time for lenders to get funds free to buy into them. Collateral currently only have c. 400k on secondary market, and even with the cashback incentives for Bolton you had to invest over 50k to get the 3% cashback rate which implies the platform can get ample funds in at the 12-14% mark. I like to think of MoneyThing as a good more mature example to Collateral - they too have a lot on the SM (c. 1,925k) but this has trotted down by a good 100k or so a day, and with 1,275k due to repay on Bolton this will soon reduce to a negligible figure, and the variety of grouped asset loans are also due for repayment at back end of July. This comment may come back to bite me but Lendy aside, I'm not expecting there to be much available on any platform with >11% paying loans as we head into August (unless volume is issued without repayment of others), Collateral has taken a big step forward in issuing a 1.6m loan, it may have taken a chunk of cashback incentives to get over the line quickly but it has paid off hugely increasing the total loans written and I would expect number of investors - I for one had an account but no investments as I have no interest in the admin hassle of loans where I can only put £25, now I've got a mixed portfolio across a number of loans
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