Studies of Life

Learning by doing.

Markup / Discount levels for Selling Overdue Loans on Bondora

16 August 2015 by Jim

One of you guys recently sent me a link to a very interesting website (http://bondpicking.com/) that allows you to see charts of the different Bondora loans that were sold on the secondary market, and at what price (XIRR or markup / discount) they were sold. They look like this:

All ratings Bondora chart

Using the current average markup, displayed in yellow on his site, I put together a table of what the average markup currently is. In order to effectively sell, I added 10% to that markup in each case, because it’s just an average, and some loans are more expensive when they’re sold. The table is below. It’s basically -14% for HR, -12% for C-F, -9% for B and -4% for A.

Grade Average Markup Markup + 10%
AA 2.5 2.75
A -3.4 -3.74
B -8.2 -9.02
C -10.4 -11.44
D -10.8 -11.88
E -10.8 -11.88
F -10.2 -11.22
HR -12.4 -13.64

I currently have a large share of overdues and 60+ days overdue loans, as I already explained, so I would like to get rid of those if possible. Since I panicked when I saw the overdue portion of my portfolio grow, I sold many loans at -25% discount at the end of 2014, and I lost an important amount of money that way. That’s why I stopped selling for now, thinking it was either not worth my time because I didn’t sell many loans I put up for sale at reasonable discounts (whatever those are!) or too expensive to sell if I had to really use a -25% discount to sell anything at all. Since I also stopped investing into new loans, my overdue loans portion of the portfolio is increasing in size. (I explained here why I stopped investing.)

Current Bondora portfolio

Using the data above, I can confidently set the discount for my loans to be close to the average discount of successful transactions, which means I don’t get too bad a deal and a larger share of my overdue loans should be successfully sold than if I used lower discounts.

My total overdue principal right now (excl. 60+ days overdue loans) is 7200 EUR. What share of my overdue loans do I expect to sell this way? I don’t know yet. 50% would be wonderful. I’ll update the post 2 months from today to tell you how it went!

Update after one week: In this first week, I sold loans for about 860 EUR, or about 12% of my overdues. But in the meantime, new ones have been added. I’m continuing to put them up for sale. 

How do you sell your Bondora loans? If you have any tips or a question, leave a comment below!

Leave a comment | Categories: bondora, Investing, investment | Tags: , , , , ,

Leave a Reply