When investors need liquidity they turn to the secondary market to buy and sell Bondora loans. As December brought with it another holiday season, investors showed their propensity to flock to this market in order to obtain cash when needed.
Transactions on Bondora’s secondary market were up to €1,184,131 on the month, higher by about 1% compared to November. The only secondary market category to increase in transactions was via Portfolio Manager, which actually rose 5.9% on the month, offsetting small decreases in transactions via API and Manual secondary market transactions.
Current loans transactions were down slightly on the month to a total of €837,595. While Manual purchases were down overall, there was an increase in manual purchases made at a discount, pointing to better deals for manual investors willing to take the time to find Bondora loans at a discount. API investors did less purchasing of current loans at a discount on the month, and made more purchases at par value.
Overdue loan transactions were almost identical when compared to the previous month, with no notable changes in transaction volume or changes in trends. The overwhelming majority (96%) of overdue loans were still purchased manually, with the remaining loans purchased via the API.
Of all the loan categories, defaulted loan transactions had the most change from last month, increasing by about 10% to €283,799 in December. There were still no defaulted loan transactions via Portfolio Manager on the month, but transactions done manually and via API both rose. Defaulted loans purchased at par or premium prices were down collectively by almost 80%. This is to be expected as defaulted loans are most often to be purchased at a discount given their increased risk. On the month, discounted purchases for defaulted loans totalled €277,352, or, 97.7% of total defaulted loan transactions.
A Normalizing Market
With defaulted loans shifting back to more discount purchases, and most other statistics remaining steady, the Bondora secondary market has normalized into a solid liquidity pool for investors. Always remember, utilizing the secondary market, especially via manual and/or API purchases can be extremely risky, and investors should not look to buy and sell Bondora loans as a way to chase higher returns. That being said, the secondary market does provide a much needed service to investors on both the buy and sell side looking for liquidity.