Is P2P and mini-bonds about to unravel?
Posted: December 3rd, 2019, 1:54 pm
First minibonds. FCA bans mass marketing
https://www.fca.org.uk/news/press-relea ... -consumers
Most of the mini-bonds (regardless of how well run or dubious their character) promise return of capital after a fixed period. Say 2 years, 5 years, 7 years whatever. One wonders though how many mini-bonds are being sold to replace existing mini-bonds by the same company (in the same kind of parallel that banks provide fixed rate bonds for say 5 years to savers but use them to provide 30 year loans to borrowers, noting not all mini-bonds work this way as some are for specific projects)
If a number of mini-bond providers (however few) can't survive (or rather repay the bond at it's due date as promised) without rolling over those bonds to existing or new customers (as they have no route to market due to adverstisting ban) will we have a run on the mini-bond providers as the fear sets in regardless of whether it is warranted?
P2P. thanks to dspp on this thread viewtopic.php?f=78&t=20676
Lendy P2P is in liquidation but at the moment the investors will have to pay the liquidators fees which will hurt for sure. Now whilst I'm sure some (the media) will argue the government should pay the fees, P2P is not covered by the £85k limit and the promotional material has been clear from the start so I can't see the government stepping in.
Which leaves investors facing even more losses.
Same question really? We will see investors pulling back from this, causing for example Funding Circle's economies of scale proposition to fall apart and then a run on the P2P providers as it becomes apparent some of these providers will fail (perhaps some consolidation in the sector might avoid this??)
https://www.fca.org.uk/news/press-relea ... -consumers
Most of the mini-bonds (regardless of how well run or dubious their character) promise return of capital after a fixed period. Say 2 years, 5 years, 7 years whatever. One wonders though how many mini-bonds are being sold to replace existing mini-bonds by the same company (in the same kind of parallel that banks provide fixed rate bonds for say 5 years to savers but use them to provide 30 year loans to borrowers, noting not all mini-bonds work this way as some are for specific projects)
If a number of mini-bond providers (however few) can't survive (or rather repay the bond at it's due date as promised) without rolling over those bonds to existing or new customers (as they have no route to market due to adverstisting ban) will we have a run on the mini-bond providers as the fear sets in regardless of whether it is warranted?
P2P. thanks to dspp on this thread viewtopic.php?f=78&t=20676
Lendy P2P is in liquidation but at the moment the investors will have to pay the liquidators fees which will hurt for sure. Now whilst I'm sure some (the media) will argue the government should pay the fees, P2P is not covered by the £85k limit and the promotional material has been clear from the start so I can't see the government stepping in.
Which leaves investors facing even more losses.
Same question really? We will see investors pulling back from this, causing for example Funding Circle's economies of scale proposition to fall apart and then a run on the P2P providers as it becomes apparent some of these providers will fail (perhaps some consolidation in the sector might avoid this??)