aju
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Post by aju on Jul 15, 2020 9:09:22 GMT
Delivered £0.5 million and yet the Access queue only moved by one place yesterday.... Wow! I was thinking the same. I guess we either have an investor or two with a v large amount (entirely possible), or - as others have suggested before - it could be that not all markets have RYIs processed every day and the 1 place was a cancellation. Or somewhere in between the two. That we're seeing these sorts of fluctuations doesn't surprise me, though. I think there might be more than one or two with very large investments, there may be a long wait for some of us ... There some quite large ones in the list on the release position thread some have paid off some haven't and not everyone has been open with their lend amounts...
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Post by lingield on Jul 15, 2020 12:33:00 GMT
It is interesting that no one is trying to guess where the inflection point is in the cycle, at some point the PF metrics will improve (even if funded by investor capital/interest haircuts) and once this occurs, there is a very reasonable prospect that investors will feel assured and new investors will be permitted to join the platform. All of which should accelerate the RYI process.
Someone must have experience of credit cycles?
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Post by Ace on Jul 15, 2020 13:01:00 GMT
It is interesting that no one is trying to guess where the inflection point is in the cycle, at some point the PF metrics will improve (even if funded by investor capital/interest haircuts) and once this occurs, there is a very reasonable prospect that investors will feel assured and new investors will be permitted to join the platform. All of which should accelerate the RYI process. Someone must have experience of credit cycles? Even if new investors were allowed to join now it seems unlikely that anyone would want to. Why invest in an unprotected investment at near FSCS protected rates? If/when further interest or capital cuts occur, in an effort to prop up an even further deteriorating PF, it's unlikely that remaining investors would be reassured. Much more likely that the vast majority of the remaining investors will try to cut their losses and join the RYI queue. So, I don't see the inflection point to be inevitable.
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Post by lingield on Jul 15, 2020 13:12:59 GMT
As a new investor if the provision fund was at 200% and the old rates returned, you would not be tempted? I suspect that there is a strong correlation between the PF coverage ratios and the RYI queue.
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Post by Ace on Jul 15, 2020 13:32:47 GMT
As a new investor if the provision fund was at 200% and the old rates returned, you would not be tempted? I suspect that there is a strong correlation between the PF coverage ratios and the RYI queue. Personally no, not even slightly tempted. As I've said before, I believe RS is a busted flush. They've proved that they can't make a profit or maintain a reasonable PF position even in the good times. So, in the long run they won't exist in their current form. Hence, they've put themselves up for sale. From a practical viewpoint, I can't see how they could reduce current investors' rates to zero and give them a capital haircut in order to boost the PF to 200%, then offer to use that bolstered PF to benefit new investors. No, that's not something I would wish to be part of.
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r00lish67
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Post by r00lish67 on Jul 15, 2020 13:39:37 GMT
As a new investor if the provision fund was at 200% and the old rates returned, you would not be tempted? I suspect that there is a strong correlation between the PF coverage ratios and the RYI queue. I would certainly be tempted, but why would they throw good money after bad? Sorry, I'd be delighted to be proven wrong, but I don't seen an inflection point here either. The PF had started to tank last year, when COVID-19 was just a glint in a bat's eye. It was proving to be a pretty marginal business anyway (hence endless fiddling with the model) and COVID-19 has now done for the existing loanbook in terms of generating a positive return. The future loanbook vis-a-vis their technology/loan sourcing, whilst containing value, will be very challenging to make profitable in the current model because: a) COVID-19/Brexit makes for a very difficult backdrop to issuing new loans profitably. (loans under management was also falling prior to COVID-19 btw) b) Investors are spooked and so will demand higher rates with much less dumb money on offer, hence less profit. Meanwhile, the only PF inflection I can imagine at present is a downward one in October/November when the furlough scheme is tapered off. Best outcome: Metro buy the platform and loanbook and make investors problems all go away (feels too optimistic, but who knows). Otherwise, again IMHO, it's just going to be a steady grinding down of the loanbook, hopefully but not certainly in graceful fashion without undue additional costs. I do not personally envisage the return of normal P2P lending operations at this point. Ever the optimist, eh? Still, predicting doom in P2P has proven to be like shooting fish in a barrel. Unfortunately.
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r00lish67
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Post by r00lish67 on Jul 15, 2020 13:42:01 GMT
As a new investor if the provision fund was at 200% and the old rates returned, you would not be tempted? I suspect that there is a strong correlation between the PF coverage ratios and the RYI queue. Personally no, not even slightly tempted. As I've said before, I believe RS is a busted flush. They've proved that they can't make a profit or maintain a reasonable PF position even in the good times. So, in the long run they won't exist in their current form. Hence, they've put themselves up for sale. From a practical viewpoint, I can't see how they could reduce current investors' rates to zero and give them a capital haircut in order to boost the PF to 200%, then offer to use that bolstered PF to benefit new investors. No, that's not something I would wish to be part of. You're clearly have more moral fibre than me, Ace I share your view though, it would be totally inequitable. Not to mention, to my post above, totally pointless for an organisation in the business of making a profit.
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Post by Ace on Jul 15, 2020 13:53:26 GMT
Personally no, not even slightly tempted. As I've said before, I believe RS is a busted flush. They've proved that they can't make a profit or maintain a reasonable PF position even in the good times. So, in the long run they won't exist in their current form. Hence, they've put themselves up for sale. From a practical viewpoint, I can't see how they could reduce current investors' rates to zero and give them a capital haircut in order to boost the PF to 200%, then offer to use that bolstered PF to benefit new investors. No, that's not something I would wish to be part of. You're clearly have more moral fibre than me, Ace I share your view though, it would be totally inequitable. Not to mention, to my post above, totally pointless for an organisation in the business of making a profit. I wish I could claim that accolade. Alas, I fear my fibre is mainly of the soluble variety. What I failed to adequately explain was: that I wouldn't want to invest in a platform that was happy to scalp its existing lenders and offer those scalping to new lenders, for fear that it might do the same again.
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Post by lingield on Jul 15, 2020 13:59:34 GMT
I think you are alarmed at an instant transformation, and I can see the ethical point being made. My original query is that classically this should just be a cycle and we are in the negative part of the curve at the moment, but the at some stage the point of inflexion should be reached (ie. lower defaults than estimated or greater recoveries than anticipated in the PF). And once the point at which the coverage ratios achieve a satisfactory level and rates normalise - then Ratesetter should be in exactly the same situation as it was before the crisis and arguably stronger, as it will be able to demonstrate that it has survived a down-cycle.
All things being equal, the inflexion point is the only way out (assuming that you don't have a buyer/benefactor and there is no wind down). Yet this forum is strangely silent on this issue.
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Post by lingield on Jul 15, 2020 14:02:22 GMT
Scalp is too strong a term, where do you think the PF funds have come from in the first place? The nature of Ratesetter is that risk is mutualised, but when you leave you don't receive (or, pay in) your excess PF contributions.
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Post by Ace on Jul 15, 2020 14:10:20 GMT
I think you are alarmed at an instant transformation, and I can see the ethical point being made. My original query is that classically this should just be a cycle and we are in the negative part of the curve at the moment, but the at some stage the point of inflexion should be reached (ie. lower defaults than estimated or greater recoveries than anticipated in the PF). And once the point at which the coverage ratios achieve a satisfactory level and rates normalise - then Ratesetter should be in exactly the same situation as it was before the crisis and arguably stronger, as it will be able to demonstrate that it has survived a down-cycle. All things being equal, the inflexion point is the only way out (assuming that you don't have a buyer/benefactor and there is no wind down). Yet this forum is strangely silent on this issue. My bold. There's the best outcome, and it's very bad. A platform that doesn't have a viable business as it can't make a profit. I assume that the crisis you are referring to is the covid crisis. But, without covid, RS was already heading rapidly towards its own crisis in that, despite much massaging of figures, and attempts to hoodwink uninformed investors into lending at lower rates, the PF was very soon going to run dry.
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r00lish67
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Post by r00lish67 on Jul 15, 2020 14:14:55 GMT
I think you are alarmed at an instant transformation, and I can see the ethical point being made. My original query is that classically this should just be a cycle and we are in the negative part of the curve at the moment, but the at some stage the point of inflexion should be reached (ie. lower defaults than estimated or greater recoveries than anticipated in the PF). And once the point at which the coverage ratios achieve a satisfactory level and rates normalise - then Ratesetter should be in exactly the same situation as it was before the crisis and arguably stronger, as it will be able to demonstrate that it has survived a down-cycle. All things being equal, the inflexion point is the only way out (assuming that you don't have a buyer/benefactor and there is no wind down). Yet this forum is strangely silent on this issue. You seem to be making what is, in my view, a very generous assumption that their published estimates are actually realistic. The majority of their PF metrics are based on their committee's discretion. The inherent risk with that is of course that it may be in their interests to make the picture appear rosier than it really is. Not to suggest any malfeasance, just overoptimism in the face of stark choices. I would personally argue that that picture has been definitively unrealistic for at least 2 years now. Their published estimates for estimated inflows versus outflows consistently suggested only minor PF falls, when in reality month after month after month very large ones were taking place. Their predictions have made a steady path from optimistic to totally unrealistic. OK, yes, there is in actuality an inflection point in the loanbook somewhere. But the stats we see aren't necessarily the place to look for that, and there's no guarantee that that inflection point isn't only a hypothetical point which occurs long after the PF has run out of actual cash. I imagine there'll be much more discussion about the inflection point here if/when it becomes unfortunately more relevant in that we'll be talking about the extent of losses on the loanbook. Until then, I assume most people are happy to cross their fingers and hope for their RYI/natural loan term/Metro to rescue them.
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Post by diversifier on Jul 15, 2020 15:13:46 GMT
I think you are alarmed at an instant transformation, and I can see the ethical point being made. My original query is that classically this should just be a cycle and we are in the negative part of the curve at the moment, but the at some stage the point of inflexion should be reached (ie. lower defaults than estimated or greater recoveries than anticipated in the PF). And once the point at which the coverage ratios achieve a satisfactory level and rates normalise - then Ratesetter should be in exactly the same situation as it was before the crisis and arguably stronger, as it will be able to demonstrate that it has survived a down-cycle. All things being equal, the inflexion point is the only way out (assuming that you don't have a buyer/benefactor and there is no wind down). Yet this forum is strangely silent on this issue. No, I think you are reducing this to just a classical risk/reward trade off based on interest rate. But it’s much more than that. Partly, I think you are confusing the return ratio of the underlying loans, with the financial product and platform layered on top of that. The real problem is that the Ts and Cs RS offer to all new investors (Access) is uninvestable. Doesn’t matter the underlying loan risk, or interest rate. Aaa+ risk at 10% interest rate is still NO, if it never comes time for your capital to be returned. The Ts and Cs give no defined timeframe for return of capital, at all. The people with term accounts simply haven’t understood this. They’re trying to hold in their heads simultaneously both “Access account holders were foolish”, and “people will start investing [in Access accounts] again, when market sentiment improves”. That’s inconsistent. It doesn’t work. Maybe people think “RS could just return to offering the term accounts”. No, it doesn’t work like that. People *had* term accounts, and the Ts and Cs were salami-sliced down to what’s on offer today. The only logical assumption I can make, is that in the *next* financial crisis, I will find the Terms will have been re-factored again to allow 100% capital loss in some different clever way. There’s no risk margin I can apply to that and make a profit. The Lion may lie down with the Lamb, but only one of them will get up again. How much do you need to be paid to be the Lamb in that scenario?
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Post by RateSetter on Jul 15, 2020 16:17:46 GMT
Good afternoon. Today we have delivered £0.5m, and the full update is below:
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adrian77
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Post by adrian77 on Jul 15, 2020 17:01:23 GMT
disappointing - yet again - I wonder where we will be at the end of the week
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