Secondary market transactions fall in October

Market & Pricing

After a 6.7% increase in secondary market activity in September, transactions slowed in October. All told, Secondary market transactions came out to €387,537 on the month, a 16.1% decrease month-over-month.

After September’s increase, the Secondary market’s transactions fell again.
After September’s increase, the Secondary market’s transactions fell again.

Portfolio Manager had the largest decline, falling 45.5% from €162,449 to €88,525. API transactions also fell by 4.5%. However, Manual transactions on the Secondary market bucked this month’s trend, increasing 1.6% to a total of €214,601. This increase put manual transactions at 55.4% of all secondary market transactions than 45.7% last month.

Secondary market total volume – October
Secondary market total volume – October

Current Loans

Manual transactions overtook Portfolio Manager for the highest share of current loan transactions on the Secondary market. Totaling €171,010 on the month, Manual transactions grew by 19.0% from September. Investors showed more willingness to pay a premium for current loans in October, as premium transactions came in at €180,088, accounting for 54.1% of all current loan transactions, up from 34.6% last month.

The most significant transactional decline was in Portfolio Manager, which decreased by 45.5% to €88,525. The overwhelming majority of Portfolio Manager transactions (97.5%) were done at par value. Lastly, API transactions fell by 10.5% even as premium value transactions were slightly higher (+4.2%) to €42,857.

Secondary market current loans – October
Secondary market current loans – October

Overdue Loans

Overdue loans totaled €34,891 of October’s transactions—a 15.5% increase from September. API transactions almost doubled to €6,592, while Manual transactions grew by 7.2% to €28,298.

This month, investors were likelier to purchase overdue loans at a discount rate rather than a premium value. Premium value transactions accounted for only 6.7% of all overdue loan transactions. Concurrently, transactions made at a discount came to 79.5% of all overdue loans, up from 49.8% a month prior.

Secondary market overdue loan transactions – October
Secondary market overdue loan transactions – October

Defaulted Loans

Defaulted loan transactions saw the most significant decline of any Secondary market category. Totaling €19,637, Defaulted loan transactions fell by 55.0%. The unlikely appeal of significant transactions for premium rate loans seems to have come to an end, as such transactions only came to €350 on the month, accounting for just 1.8% of defaulted transactions. This is a strong contrast to September’s 32.0% share of defaulted loan transactions.

Meanwhile, API transactions flipped back from last month’s decline and grew by 73.3% to €4,344, accounting for 22.1% of all defaulted loan transactions.

Secondary market defaulted loan transactions – October
Secondary market defaulted loan transactions – October

Total transactions fall, but Manual transactions are on the upswing

Even though there were fewer transactions on the Secondary market, Manual transactions continued to grow for the second month. At the same time, manual investors were also more willing to pay a premium for current loans. While the Secondary market accounted for its lowest level of transactions this calendar year, a total of €387,537 transactions still took place.

Remember, investors should not seek higher returns from buying and selling loans on the Bondora Secondary market.

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