Author Topic: Buying Notes at premium in current environment  (Read 477 times)

AnilG

  • Hero Member
  • *****
  • Posts: 1120
    • View Profile
    • PeerCube
Buying Notes at premium in current environment
« on: June 25, 2020, 07:35:02 PM »
Recently, I noticed that in my portfolio, as well as reported by peercube users, that notes are actually being sold at premium. I have hard time coming up with reasons why someone will buy notes at premium during current environment of pandemic, considering lending club has increased interest rates on new loans and tightened the credit criteria so new loans are likely to be higher quality than loans issued a year or two ago during better economic times. Most of these sold notes are tend to be from pristine repay on time loans but still ...

Any thoughts from those who are actively buying notes on secondary market, why would they buy notes on premium?
---
Anil Gupta
PeerCube Thoughts blog https://www.peercube.com/blog
PeerCube https://www.peercube.com

Ran

  • Full Member
  • ***
  • Posts: 148
    • View Profile
    • Email
Re: Buying Notes at premium in current environment
« Reply #1 on: June 26, 2020, 02:43:25 PM »
(1) some states such as NY do not have access to new issue loans, so Folio is the only option for them. NY must have a lot of investors.
(2) Will be interested to know what grades were sold in premium? C or D? some people might be willing to pay a premium for FICO-trend-up never-late B/C/D loans a few months after issuance

AnilG

  • Hero Member
  • *****
  • Posts: 1120
    • View Profile
    • PeerCube
Re: Buying Notes at premium in current environment
« Reply #2 on: June 26, 2020, 07:38:18 PM »
Yes, these are mostly C and D never late loans with number of payments remaining fewer than half of loan term. Most of these notes were previously traded at discount and now being bought by someone at premium after loans made few more payments.

(1) some states such as NY do not have access to new issue loans, so Folio is the only option for them. NY must have a lot of investors.
(2) Will be interested to know what grades were sold in premium? C or D? some people might be willing to pay a premium for FICO-trend-up never-late B/C/D loans a few months after issuance
---
Anil Gupta
PeerCube Thoughts blog https://www.peercube.com/blog
PeerCube https://www.peercube.com

Debt Free

  • Full Member
  • ***
  • Posts: 125
    • View Profile
    • Email
Re: Buying Notes at premium in current environment
« Reply #3 on: June 28, 2020, 08:24:07 PM »
Could you provide a few example notes?

AnilG

  • Hero Member
  • *****
  • Posts: 1120
    • View Profile
    • PeerCube
Re: Buying Notes at premium in current environment
« Reply #4 on: June 28, 2020, 08:34:36 PM »
144067096

147758633

125330246

Could you provide a few example notes?
---
Anil Gupta
PeerCube Thoughts blog https://www.peercube.com/blog
PeerCube https://www.peercube.com