Another month of steady returns from Bondora loans. Across time and origin of issuance, loans on the platform remain at levels consistent with previous months. As always, performance charts by country are broken down by number of loan issuances over the given time period, with Orange representing <50 loans, Blue 51-200, and White >200.
Overall, yearly performance for Bondora loans were within a 0.5% change in return across all years when compared to the previous month. This shows a kind of stability which we at Bondora believe can be maintained throughout the year and into the future.
Quarterly performance on Bondora loans saw double-digit returns over the past 6 quarters. Preceding quarter returns remained steady, and much like their yearly performance, were within a 0.5% change from the previous month.
B rated loans and lower continue to outperform their target return rates more often than higher rated loan categories across Finland. Meanwhile, the only category which has seen more than 200 loans issued consecutively per quarter since Q3 2017 is in F rated loans.
The biggest chunk of loans issued out of Estonia are in rating categories B-E, with A rated loans also issued at high levels. In all quarters of 2018, the actual return of Estonian loans has outperformed the target. Whilst the spread differs per rating, this pattern is seen across all ratings from AA-HR.
Seeing as the loans issued out of Spain not only have a higher risk rating, but are less in quantity, the numbers are skewed toward higher returns. Returns above 25% are not uncommon, especially in the F and HR rated categories. Still, previous loans issued in D rated categories have outperformed their target returns for several quarters dating back to 2017.
Headlines in Economic News
It may feel like Brexit has been in the headlines for the past year, and that’s because it has. By now, D-Day on Brexit has come and gone multiple times, with no deal yet reached by both parties. Prime Minister Theresa May has been ridiculed over and over again at her inability to come to a compromised deal between both parties. Because May has failed to find a deal, she has once again asked for an extension, with Brexit to be postponed until June 30th. As it stands today, it is unclear whether this postponement will be approved by the EU.
The Central Bank of Spain is fairly concerned about the lack of a Brexit deal, and was quoted as saying a no-deal situation in the UK would have a “significant”, but not “excessive” effect on the economy in Spain. It is expected that in this scenario the Spanish economy would be affected negatively by 0.82% over the coming five years. On the flipside, if Britain is able to strike a deal the economic downside would be lessened dramatically to 0.02%. The bank went on to warn that a departure from the EU by Britain is the major geopolitical uncertainty on the year set to play a role in Spain.
There is upheaval in Finland, where just weeks before the country was set to vote on a new government Prime Minister, Juha Sipila resigned. Siplia cited a failure to come to terms with new social care and health services as his reasons for taking leave. While this may have been a shock to some, others view it as a strategic move heading into the election. Pasi Kuoppamaki, chief economist at Danske Bank A/S in Helsinki noted, “The collapse of the government is in a way surprising, but also understandable. Now the coalition partners can focus on campaigning for the elections without needing to cooperate closely. There will be no major impact on the economy.” This will likely be a hot topic heading into the country’s general election upcoming in April.
A 3.9% growth rate in Estonia during 2018 was seen as a strong number pointing to continued economic growth in the country. However, according to institutional bank Luminor, which is headquartered in Tallinn, Estonia, the GDP growth rate in the country is expected to fall below 3% in 2019. In a statement Luminor elaborated on the prediction. “Caution is warranted with headwinds continuing in the external environment, with global trade uncertainty and US-China trade negotiations in progress,” the bank said. While the labor market in the country is expected to remain strong, questions around consumption and global competitiveness have led many to wonder how the country will maintain its solid growth rate in the coming years.