Liz
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Post by Liz on May 10, 2017 12:34:42 GMT
Ok, I've been thinking about this for a while.
What happens if a LTTP can't fund a DFL anymore?
A lot of DFL's have substantial sums for sale on the SM and more and more members must be fully exposed or don't want exposure to some of the DFL's. All of theDFL's need over £70m in funding over the next 12 months, that is a lot of money if new members dry up or we get an economic shock.
Does anyone else have concerns about all or specific DFL's.
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elliotn
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Post by elliotn on May 10, 2017 12:41:37 GMT
Currently underwriters are stepping in on under funded loans (assuming Ly are no longer holding new loans on BS for FCA authorisation).
No idea what kind of u/w provision is in place.
Presumably incentives would be used if DFLs were left unfunded (FS CB/BRs come to mind).
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Liz
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Post by Liz on May 10, 2017 12:52:10 GMT
Currently underwriters are stepping in on under funded loans (assuming Ly are no longer holding new loans on BS for FCA authorisation). No idea what kind of u/w provision is in place. Presumably incentives would be used if DFLs were left unfunded (FS CB/BRs come to mind). I'm talking about 10's of millions, not just a few hundred K. I can't see underwriters for example on DFL13 wanting to have millions in liability with the real possibility of having to hold to term. Paying underwriters and incentives is also expensive, which could strain a platform.
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puffin
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Post by puffin on May 10, 2017 13:01:21 GMT
What we are seeing is the effects of supply and demand. Currently there is not enough supply of money, hence the SM filling. If the DFL funding don't fill at 12%, then a market driven way is to increase the rate above 12%.
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Post by d_saver on May 10, 2017 13:12:58 GMT
Ok, I've been thinking about this for a while. What happens if a LTTP can't fund a DFL anymore? A lot of DFL's have substantial sums for sale on the SM and more and more members must be fully exposed or don't want exposure to some of the DFL's. All of theDFL's need over £70m in funding over the next 12 months, that is a lot of money if new members dry up or we get an economic shock. Does anyone else have concerns about all or specific DFL's. I was wondering the exact same thing earlier today, after I saw the go live for the next few tranches of things. If a tranche does not fill, either underwriters have to be used or the developer gets no funds? I'm assuming lendy would not use it's own money to attempt to bridge any gap. This could grind a project at a critical phase into a halt for lack of cash, especially if the current situation of tranch fills after individual SM sales is kept. Tranches are I think typically needed fairly quickly. As someone else pointed out though, this IS the law of supply and demand, and given time to work, typically works very well. I'm a firm believer in it. If Lendy cannot fill parts at 11 or 12% despite the extra marketing, then they will simply have to raise rates to attract further funds. Once Lendy start to get issues with lack of inbound cash, this will likely happen. Their timing for introducing lots of low rate loans to soak up cash at a time when some are beginning to get very cautious is a bit bad.... It will work itself out, or Lendy will cease to be able to keep offering people cash. Hopefully they adapt before it effects their business too much.
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puffin
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Post by puffin on May 10, 2017 13:17:19 GMT
Currently underwriters are stepping in on under funded loans (assuming Ly are no longer holding new loans on BS for FCA authorisation). No idea what kind of u/w provision is in place. Presumably incentives would be used if DFLs were left unfunded (FS CB/BRs come to mind). I'm talking about 10's of millions, not just a few hundred K. I can't see underwriters for example on DFL13 wanting to have millions in liability with the real possibility of having to hold to term. Paying underwriters and incentives is also expensive, which could strain a platform. It seems likely that tranches on DFL013 would have a new asset page; as the current demand (100K+ on SM) suggests a higher rate then DFL013's 11% is required.
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fp
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Post by fp on May 10, 2017 13:27:59 GMT
What we are seeing is the effects of supply and demand. Currently there is not enough supply of money, hence the SM filling. If the DFL funding don't fill at 12%, then a market driven way is to increase the rate above 12%. Had a very similar conversation this morning and agree fully, too many loans, too little reward and too many uncertainties about overdue loans.
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mikes1531
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Post by mikes1531 on May 10, 2017 20:25:33 GMT
What we are seeing is the effects of supply and demand. Currently there is not enough supply of money, hence the SM filling. If the DFL funding don't fill at 12%, then a market driven way is to increase the rate above 12%. Had a very similar conversation this morning and agree fully, too many loans, too little reward and too many uncertainties about overdue loans. Could Lendy systems cope with different rates on different tranches? If they're ranked pari passu, the SM in lower-rate parts would freeze up completely if there were to be any higher-rate parts on the SM.
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Liz
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Post by Liz on May 10, 2017 20:29:21 GMT
Had a very similar conversation this morning and agree fully, too many loans, too little reward and too many uncertainties about overdue loans. Could Lendy systems cope with different rates on different tranches? If they're ranked pari passu, the SM in lower-rate parts would freeze up completely if there were to be any higher-rate parts on the SM. Worst case platform failure! Then there is is no chance of latter tranches being filled at all. Premium bonds anybody?
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