# Platform level recovery rate graphs

Collection & Recovery

Last week we introduced recovery statistics for investor’s personal portfolio and we are continuing in similar lines for the entire platform portfolio.

## Introducing the recovery rate graph for Bondora

We are currently working to bring you a graph that highlights the progress of the recovery on our platform level compared to expected recovery.

The graph will select all the loans that defaulted within the selected year and calculates their weighted expected recovery based on the expected recovery used in Bondora Rating. This will enable us to highlight the actual recovery to expected recovery ratio for each quarter after the loan defaulted.

In other words, the graph shows you how well the loans in each of the Ratings are recovering at certain points in time compared to what was expected in their Bondora Rating calculations.

Example:

If the weighted average expected recovery for a group of loans within a Bondora Rating is 30% and actual recovery after 6 quarters is 45%, then the graph will show this as 150% out of expected recovery has been reached for that Rating.

For data points where the count of defaulted loans is relatively low, we have used a dotted line to highlight that the results could be based on only a few loans and it can be subject to significant shifts when recovery statistics for additional loans will come in.

We hope that this graph will give you a quick way to see how the actual recovery progress is going and has been going throughout the time on our platform.

### 14 responses to “Platform level recovery rate graphs”

1. jul.f says:

Expected recovery is just a tricky statistic word for me, because we cannot knowing it. It is just to confuse investor because for them expected recovery = full capital recovery + full recovery of interest +full recovery of penalties for a majority of them

• Taavi Pertman says:

There is no rational or statistical reason to expect a full recovery in majority of the default cases. If the recovery were 100% as you described, all loans would be priced essentially the same since there is no risk of loss.

In reality, most loans don’t recover by 100% or even close to this and for this reason, it is reflected in the loan pricing through Bondora Rating – the lower the expected recovery, the higher the interest rate to cover this loss.

This graph shows you whether the recovery is better, same or worse than what was expected in the loan pricing. If the expected recovery for a loan during pricing was 30%, but actual was 40%, then the graph shows the ratio as 133% and your return for that loan is better than expected for such loans during pricing. If the actual recovery is below 30%, then this is also reflected in the graph and you can easily see that its recovery performance is below expected levels.

• JamesFrance says:

So how can you set an expected recovery rate when your defaulted Spanish loans have hardly achieved any recovery and have not been on the platform for long enough to even establish a true default level? It seems that about half of them have already defaulted after 12 months and they still have several years before they would be fully repaid.

Is there any actual historical data which allows you to set a correct target and if so can you please explain how that is calculated?