P2P: Ablrate

Plus wrote: »

Just a curiosity... how does Ablrate handle currency fluctuations?

Say they advertise an aircraft loan at 10%. Ablrate investors deposit in GBP, but the price of the aircraft is in USD and the repayments are too. Let's say the dollar weakens by 20%. Now the investors are only getting a yield of 8% in GBP terms and there isn't enough capital to pay them back at the end.

In the bond markets that's a risk investors face, but I don't see how it works in the Ablrate market which is strictly GBP. Do they fully hedge all of the currency risk?

Fully hedged and/or payment obligation in Pounds in anything long term that I've seen. Also fully disclosed.

There is a five year container loan where the new buys are in dollars with, I think, no hedging normally, but those are many short term deals and those involved do know about currency issues and would protect if it seemed sensible. At the moment they have said that currency and steel price issues combined with sale prices make leasing more profitable and less risky than buying for resale, so plan to do that until things change. They also just returned about 19% of the originally invested money with the 15%+ interest on top and plan to return some more. Just because they don't want the money if they can't use it effectively.

Yes, do remember that the secondary market is the way to get invested quickly at Ablrate. Then do more as new loans come up, a few a month.

You can get invested pretty quickly in 11% and loans at MoneyThing but mainly when a new loan will be going live in the next day or so. Then people do some selling and if you're fast you can buy. I bought about £14k over the last week that way. But Ablrate usually has those rates or better on its secondary market with less trouble. Worth using both places, though.

That was at MoneyThing. Looks as though there might be four new loans at Ablrate next week.

elephantrosie wrote: »

one question about ablrate. for those selling their loans on secondary market at less than 100% price, does that mean that they will be losing money?

just trying to put myself in the same situation hypothetically

Probably, but sometimes there were bonus payments made at the time a new loan was issued. Not recently so you're not likely to encounter one of those. They could just need the money and be willing to take a small loss to encourage buyers.