50 replies to this topic

[sl75]

propman, on 21 April 2011 - 14:11, said:

I am surprised at a move to 25bps levels in their bidding, on £1000 that is a minimum of £2.50pa.

25 bps increments seem perfectly acceptable for entire national economies by central banks who control the interest rate on billions of pounds of deposits... so quite how it can be inadequate for a small investor with their few hundred pounds is beyond me...

The "interest" that a £1k bidder is bidding for is "worth" on the order of about £100, so a £2.50 increment doesn't seem unreasonable (eBay has a £2 bid increment for £100 items for example).

What I find unusual is the Zopa Listings system where 0.01% increments on a £10 bid are possible, undercutting other bidders by a small fraction of a penny - an individual minimum bid making no measurable difference. Even on a £1k bid it's still only making a 10p pa difference which substantially below what you'd normally expect for a bid increment in any other "live" auction format.

[propman]

sl75, on 21 April 2011 - 14:58, said:

25 bps increments seem perfectly acceptable for entire national economies by central banks who control the interest rate on billions of pounds of deposits... so quite how it can be inadequate for a small investor with their few hundred pounds is beyond me...

The "interest" that a £1k bidder is bidding for is "worth" on the order of about £100, so a £2.50 increment doesn't seem unreasonable (eBay has a £2 bid increment for £100 items for example).

Central banks have a rigged market and are not in competition for the required central deposits which are the amounts that receive the "Base rate", or other bank operations. However, AIUI the pricing of gilts and other governmant paper is in much smaller increments. I take your point on E-bay, but what the public accept on goods purchases from the dominant player in the market (eg the many shortfalls of PayPal) and what sophisticated investors accept from one of many possible investments are, IMHO (of course) not comparable.

sl75, on 21 April 2011 - 14:58, said:

What I find unusual is the Zopa Listings system where 0.01% increments on a £10 bid are possible, undercutting other bidders by a small fraction of a penny - an individual minimum bid making no measurable difference. Even on a £1k bid it's still only making a 10p pa difference which substantially below what you'd normally expect for a bid increment in any other "live" auction format.

Agreed, I would expect both to gravitate to 0.1%.

[edited quote]

Edited by propman, 21 April 2011 - 15:22.

[sl75]

propman, on 21 April 2011 - 15:21, said:

However, AIUI the pricing of gilts and other governmant paper is in much smaller increments.

When I look at the range of gilts available to trade via my trading ISA, I see that every single one has a coupon that is a multiple of 25bps... although obviously the coupon is less relevant when the yield is dictated more by the premium or discount to par value.

Some corporate bonds have "unusual" coupons, but a large proportion of these are nevertheless multiples of 25bps... again the premium/discount from par is more relevant for practical purposes.

Although secondary market prices are potentially more fine-grained, checking a sample of gilts via e.g. http://www.iii.co.uk...t&it=lg&folder= these seem often to have a spread between the bid/ask of considerably more than the equivalent of 25bps anyway, and fluctuate in "value" by more than a whole percentage point during the course of a month, so defining the value more precisely than 25bps seems fairly meaningless...

... it seems only to be retail customers who think that they can determine what return they require (or borrowing rate they're willing to pay) more precisely than 25 bps.

[propman]

sl75, on 21 April 2011 - 16:53, said:

When I look at the range of gilts available to trade via my trading ISA, I see that every single one has a coupon that is a multiple of 25bps... although obviously the coupon is less relevant when the yield is dictated more by the premium or discount to par value.

Some corporate bonds have "unusual" coupons, but a large proportion of these are nevertheless multiples of 25bps... again the premium/discount from par is more relevant for practical purposes.

Although secondary market prices are potentially more fine-grained, checking a sample of gilts via e.g. http://www.iii.co.uk...t&it=lg&folder= these seem often to have a spread between the bid/ask of considerably more than the equivalent of 25bps anyway, and fluctuate in "value" by more than a whole percentage point during the course of a month, so defining the value more precisely than 25bps seems fairly meaningless...

... it seems only to be retail customers who think that they can determine what return they require (or borrowing rate they're willing to pay) more precisely than 25 bps.

As you rightly point out, it is the premium or discount on issue that provides the fine tuning of the rate offered for Gilts (and I assume corporate bonds). The nominal coupon is announced in advance and is only indicative of the expected region of initial yields. The over night deposit rates on substantial deposits seem to be in multiples of 5bps from the providers which we use. As for the spreads, there is a whole other discussion about this form of remuneration for market makers, while, AIUI, there will always be a spread as anything closer will have been matched and lead to trades. Comparing the acceptable yield with the price that sellers will offer at is not just a matter of the granularity of the market. their are also fees and the admin of processing to account for before it will be possible to reap a given price from a sale that makes holding more attractive.

[rudry2677]

Has anyone here had any dealings with Thincats yet?   If so, would you like to share your experience?

[easteregg]

I've not got an account with ThinCats as the £1000 minimum loan per company is a bit too high for me.  I have spoken to the company and they have been very responsive.  I've published the details on ThinCats here, but they have clearly established themselves as the 4th P2P provider after Zopa, Funding Circle and RateSetter.

[Jeansloans]

I've now been in on four loans. It takes them a while to underwrite each one after closing which is probably a good thing. I felt nervous about it at first, though they issue very detailed information on the firms borrowing and each one has security. You are issued with a certificate for each loan but the information on repayments after the loans have been dispersed is currently quite sparce and awaiting a website upgrade. All repayments have been made on time on my four loans. I have interest rates between 12.3 and 14.9 on my four thousand investment. Kevin Caley who I believe is the CEO is very communicative and very helpful and friendly.
Feel free to ask me further questions if you have any.

[rudry2677]

Jeansloans, on 20 October 2011 - 06:12, said:

I've now been in on four loans. It takes them a while to underwrite each one after closing which is probably a good thing. I felt nervous about it at first, though they issue very detailed information on the firms borrowing and each one has security. You are issued with a certificate for each loan but the information on repayments after the loans have been dispersed is currently quite sparce and awaiting a website upgrade. All repayments have been made on time on my four loans. I have interest rates between 12.3 and 14.9 on my four thousand investment. Kevin Caley who I believe is the CEO is very communicative and very helpful and friendly.
Feel free to ask me further questions if you have any.

Thank you very much for your reply.   I may just dip my toe in for a few shillings.  Yes, I know the minimum.  

[rudry2677]

easteregg, on 19 October 2011 - 22:15, said:

I've not got an account with ThinCats as the £1000 minimum loan per company is a bit too high for me.  I have spoken to the company and they have been very responsive.  I've published the details on ThinCats here, but they have clearly established themselves as the 4th P2P provider after Zopa, Funding Circle and RateSetter.

Thank you for the link.

[Geoffj]

Just to mention that I have been playing in Thincats too.

I have quite  few loans that are active and a several more that are being set-up.

The loan information is very good. The only thing that bugs me is the length of time it takes between the auction closing  and the money being distributed (ie earning). Needless to say I have a sophisticated spreadsheet tracking everything   .  The average duration between the auction closing and the distribution is around 28 days (1 loan was over 60 days).

Nothing runs as smoothly or as accurately as with Zopa - but I like it .

Regards,
Geoffj

[Uncle Tone]

Geoffj, on 15 July 2012 - 21:18, said:

Needless to say I have a sophisticated spreadsheet tracking everything   .  
Regards,
Geoffj

Crikey Geoff - I didn't know you knew Excel?  

[Geoffj]

Uncle Tone, on 15 July 2012 - 22:22, said:

Crikey Geoff - I didn't know you knew Excel?  

Well I keep it a low profile.    

Regards
Geoffj

[mj62mj62]

Jeansloans - you mention Kevin as the CEO - over on the moneysavingexpert forum there is a thincats staff member named emperorbruce who was pretending to be a customer  and was caught out.  That seems pretty slimy and amateur!

On another forum, someone commented that these secured loans were, in one case, found to only have a small amount of security against it.

I love zopa (long time lender) and was seriously interested in thincats but owhere there is smoke there is fire. Do they seem less amateur in your actual dealings with them?

[elljay]

[mod hat on]

In the interests of fairness and substantiating claims made...

mj62mj62, on 15 September 2012 - 06:06, said:

Jeansloans - you mention Kevin as the CEO - over on the moneysavingexpert forum there is a thincats staff member named emperorbruce who was pretending to be a customer  and was caught out.  That seems pretty slimy and amateur!

Here's the thread over on Moneysavingexpert from June 2011.  Emperorbruce's last post was August 2011.

mj62mj62, on 15 September 2012 - 06:06, said:

On another forum, someone commented that these secured loans were, in one case, found to only have a small amount of security against it.

Please can you post a link to the thread or PM me details so I can link to it.

[hr1424]

mj62mj62, on 15 September 2012 - 06:06, said:

Jeansloans - you mention Kevin as the CEO - over on the moneysavingexpert forum there is a thincats staff member named emperorbruce who was pretending to be a customer  and was caught out.  That seems pretty slimy and amateur!

On another forum, someone commented that these secured loans were, in one case, found to only have a small amount of security against it.

I love zopa (long time lender) and was seriously interested in thincats but owhere there is smoke there is fire. Do they seem less amateur in your actual dealings with them?

Firstly, as noted above, Thincats loans are secured on business assets (often first charges it seems), whereas lending on Funding Circle, for example, is still mainly unsecured, albeit with most loans offering some form of guarantee. Typically, the information set provided with Thincats loan requests is superior to what you see on FC, and may incude personal credit scoring for principals providing any personal guarantees.  Ultimately, individuals can get around their supposed obligations via personal bankruptcy, IVAs as seen on some FC loans recently, but there should often be greater transparancy on any proposed security/guarantees with the TC proposals - FC gives no detail of or output from DG verification.

Particular caution may be warranted in the case of larger borrowing requests where funding is being sought on more than one platform. There were some recent exchanges about borrowers sourcing loans from both TC and FC where the investment case presented to TC lenders was not only more detailed but apparently fundamentally different in key respects from that previously put to FC lenders shortly before and potentially material information had allegedly not been disclosed to the FC lenders.Having looked back at the loans in question it could be alleged that some material facts and risks noted on TC were not disclosed on FC. Clearly, this should not happen / be allowed to happen. The examples mentioned all involved the same particular broker/sponsor. TC lenders may therefore have an advantage in terms of disclosures over FC lenders to the same company/ies and it might make sense to cross-check the information given with these dual borrowers - doing so has prompted me to offload some of my FC investments, another relevant factor being that they are now subordinated to the Thincats loans. Incidentally, I did query the highlighted issues with FC but have nothing positive to state about the response to date. Referring to no platform in particular, is it the case that a wish to maintain abject ignorance is the default mode to adopt where a platform is not FSA authorised/regulated (whereas some crowdfunding sites such as Seedrs are and any failures to disclose material facts and/or making any misleading statements to investors may prove to be actionable as is the case for listed entities - and thus failures to police effectively have more potential consequences)?

Edited by hr1424, 19 September 2012 - 06:54.

[hr1424]

TC have launched a 3-yr investment vehicle which provides something closer to an 'auto-lend' approach. The minimum investment is £1,000. Potentially interested parties will need to register to get the full details but it looks as though the basic return is intended to be at a fixed rate with interest-only payments made on a monthly basis. There is an explicit aim to exceed this level (TC platform average is >10% with no fees payable by lenders) and distribute any excess to investors. As you would expect it has its pros and its cons. It effectively removes investment discretion from the lender and will not seek to replicate the platform 'market' portfolio but it does potentially make TC a bit more accessible with a minimum of 6 underlying investments (initial target 10+) so a maximum of c£167 exposure per secured loan based on the minimum investment of £1,000.

Edited by hr1424, 20 November 2012 - 03:32.

[donallgarvin]

Got an email this morning about a TC loan:

I originally bid on this as a fixed interest 6 month loan to help a budding entreprenuer organise business conferences for people to network.
At the end of 6 months, the guy had cash-flow problems and asked for a 3 month extension at a higher interest rate.
All money was repaid at the end of 9 months and he went on to source more money from TC lenders.

The email this morning says

Quote

"However, it appears that the financial success of the event was dependent on generating substantial commission income from the publishers and exhibitors who were sharing revenue from book and video sales and these sales turned out to be well below plan.  This means that the income from the event is likely to fall well short of that needed to pay all the creditors and the business model has not worked."

I'm glad I didn't lend again on it as it didn't seem like a good business to me - not to mention the owner of the company appearing on the front of a magazine called something like "Asian Money" sitting a top a sports car and hiring Richard Branson for one of his seminars.  Too glitzy for me.

[donallgarvin]

Quote

We expect that the income from the event will cover a substantial proportion of the ThinCats loan and by moving fast we should get the chance to enforce our debenture over the assets which gives us priority over all the other creditors.  We will be taking robust action to recover any remaining balance by calling in the personal guarantee but it is far too early to predict the outcome of these actions and the impact they will have upon your investment.

Basically it is a default.
Good thing I listened to my gut on this one - losing £1000 min is not something I have the stomach for.

[sl75]

donallgarvin, on 23 November 2012 - 08:00, said:

Basically it is a default.

But it can't be a default.... ThinCats are still proudly announcing "No losses so far" ... that couldn't possibly mean anything other than the obvious interpretation considering how "transparent" they're claimed to be? ... could it?

Besides, someone was claiming that bad deals didn't get through the extra scrutiny on ThinCats because lenders were so much more selective!   (although there's clearly some truth in the "extra scrutiny" claim, as the "ThinCats Lending Club" loan, that pretty much guarantees a worse deal than lending directly, seems to be struggling at "4.80 %  of minimum required" despite being the only loan available on the site right now!)

(far as I can tell, most of the deals that didn't make it so far were simply due to lack of lender funds, and ThinCats management trying to bite off more than their market could chew in order to maintain their "superiority" in being able to handle larger loans than the maximum Funding Circle were offering at the time)

[propman]

sl75, on 23 November 2012 - 13:14, said:

But it can't be a default.... ThinCats are still proudly announcing "No losses so far" ... that couldn't possibly mean anything other than the obvious interpretation considering how "transparent" they're claimed to be? ... could it?

I have not lent on either so have no axe to grind, but in Zopa parlance I would say that this is in collections and has passed to CRS. A full recovery is still possible. WHile I agree that this is not what "no losses so far" would mean to the average lender, it is consistent with Zopa trumpeting default rates as opposed to expected defaults including an estimate of lates.

Even if this is effectively a default, "one default does not a 2008 make".

JMHO

- PM