The secondary marketplace has enjoyed a sustained level of buoyancy since the introduction of the BuyBack Guarantee. The months of September, October and November 2019 have seen the highest levels of trading between investors since February 2016. Furthermore, more investors are trading microloans at a premium.
The secondary marketplace allows investors to trade microloans at either a premium or discount. A secondary market is an important part of any peer-to-peer lending platform as it provides liquidity. This means investors may divest their portfolios before the end of the loan term.
Where confidence in a particular loan is high, lenders are often able to sell these parts at a premium to other investors that either missed out on the original loan auction or are seeking to increase their holding in a particular loan. Where loans are sold at a discount this can often indicate a lack of confidence, as investors reduce their exposure.
In October 2019 £129,847.33 of microloans were sold at a premium, compared to only £10,220.60 sold at a discount. Thus far in Nov 2019, no loans have been sold at a discount and £131,719.16 microloans have been sold at a premium.
View microloan trading volumes at any time on the stats page.
BuyBack Guarantee
Since the introduction of the buyback guarantee this summer, there has been a strong demand to buy microloans with the guarantee attached. Whilst microloans with a buyback guarantee command a higher premium, lenders accept the lower rate of return for the comfort of the reduced risk, provided by the guarantee.
Only high net worth and sophisticated investors with previous experience of investing on rebuildingsociety.com may sell loans with a buyback guarantee, these investors are known as guarantors. Currently over £155,458.79 of loan capital is guaranteed by the buyback guarantee. Guarantors are restricted to only offering up to 40% of their performing loan book as guarantees so as to always have sufficient capital to cover any liability to those investors that have bought guarantees from them.
Find out more about our unique P2P BuyBack Guarantee
Secondary Marketplace
It is important to remember that whilst rebuildingsociety.com provides a secondary market for investors, it does not guarantee that lenders will be able to sell microloans, nor can it guarantee a timeframe for sale. The secondary marketplace operates on a supply and demand basis. When investing in P2P loans, investors should be prepared to hold the microloan for the remaining period of the loan term.
