Did you invest in ‘D’ rated loans in Estonia in November?

Welcome to the monthly origination post for November, here we go in to detail about the distribution of investments that were made and some interesting stats per country of origin. If you missed October’s post, you can check it out here. The total amount invested through the platform in November was €3,188,375, an approximate 7% increase on October’s €2,980,477. The number of investors at the time of writing has also increased up to 31,099.

As we approach the end of the year, we are interested to see how the festive season effects our investor’s financial discipline and if this has any impact on the total amount invested in the platform for the month.

Loan origination by country

Estonian loans have proved once again to be the most popular this with a total of €2,156,721. At over two thirds of the total share, this has shown an increase of nearly 17% compared to the amount of Estonian loans originated in October. Interestingly, the figures have shown a decrease in Spain and Finland, where Spain accounted for less than 10% of the total investments. This indicates a smaller percentage of investors are choosing to invest in higher risk Spanish loans as part of their overall strategy, we will go in to more detail about the share of investments by risk rating below.

Share by country – November 2017
Country Interest Amount Share
ESTONIA 21.24% €2,156,721 67.64%
SPAIN 61.96% €295,232 9.26%
FINLAND 36.33% €736,422 23.1%

Share by rating, country and amount

The table below contains the weighted average interest rate, total amount and share per country of origination and rating. Here are some key takeaway’s we can see:

  • Loans graded with a ‘D’ rating account for the highest share of investments at 18.86% of the total share. Specifically in Estonia, €471,428 of ‘D’ rated loans were funded with an average interest rate of 29.47%
  • ‘AA’ rated loans had the lowest number originated at 7.88% of the total share.
  • 75.9% of loans originated in Spain are rated F and HR.
  • The total number of HR loans originated in Spain were 25.85% in November, compared to 49.76% in October.
  • The average weighted interest rate for HR loans in Spain is 94.1%, in October this figure stood at 136.87%
Share by country and rating – November 2017
ESTONIA SPAIN FINLAND
Rating Interest Amount Share Interest Amount Share Interest Amount Share
AA 9.8% €196,374 6.16% 9.23% €54,873 1.72%
A 11.79% €236,230 7.4% 10.48% €24,259 0.76%
B 14.88% €461,319 14.47% 14.83% €52,385 1.64%
C 21.01% €507,692 15.92% 21.91% €7,855 0.25% 21.94% €64,653 2.03%
D 29.47% €471,428 14.79% 31.37% €20,943 0.66% 29.11% €108,566 3.41%
E 34.12% €283,678 8.9% 39.8% €42,300 1.32% 36.13% €124,525 3.9%
F 58.16% €147,814 4.64% 49.02% €260,726 8.18%
HR 94.10% €76,320 2.39% 72.34% €46,435 1.46%

What does this tell us?

Looking at the table above, it suggests that even though the amount of originations have increased in November, the distributions of investments across credit ratings are more diverse. Also, it’s interesting to see the correlation between the decrease in the average weighted interest rate in Spanish HR loans and the share of originations in this risk rating. Perhaps investors are utilizing the interest rate filter within the Portfolio Pro feature in order to eliminate any HR loans that do not charge a rate above their pre-determined threshold, based on their risk-reward preferences.

What conclusions can you draw from this data? We would love to hear them, so please leave us a comment below.