Monitoring your investments

The watchlist and what it all means.

We keep a close eye on all client investments and those that require closer monitoring are placed onto our watchlist as a precaution.

 

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Why are investments placed on the watchlist?

When a loan is added to our watchlist it means that our investment team has considered it to require closer monitoring due to minor performance issues. The reasons for this can vary but typically include the term of the loan being exceeded or late interest / capital repayments. 

 

Should I be concerned if the terms are exceeded?

It is not uncommon for the term to be exceeded, especially in property development and bridging loans. In developments, unforeseen circumstances such as adverse weather conditions or delays in the delivery of materials can prevent the development keeping to its schedule. In bridging, administration of refinancing can take longer than the platform and borrower expected, resulting in the term being exceeded.

If an investment is on the watchlist, will it result in a loss?

The watchlist is an internal mechanism created and monitored by BondMason’s Investment and Operations teams, and is reviewed weekly. This does not necessarily mean that the position will result in a loss. It is important to note that the vast majority of loans (90%+) that are put on the watchlist go on to be fully repaid.

What does a loan in 'recovery' mean?

Loans that are in ‘recovery’ include loans that have defaulted and consequently, the lending platform has begun recovery proceedings. Reasons include a lack or breakdown of communication with the borrower and / or frequently missing interest / capital repayments. Investments in recovery may or may not lead to a loss and this depends on a number of factors, including the nature and value of security. The vast majority of loans in recovery repay successfully and in full.

How does the recovery process work?

In the event of default where property is held as security, platforms will exercise the charge they hold over the security property in order to recover invested funds. It is important to note that the vast majority of loans, especially those backed by property, have gone on to be fully recovered.

What about write-offs?

When a loan in recovery has been concluded and there is a shortfall, we mark the balance as a write-off. This can provide a marker for accounting and tax purposes.  In some cases recovery efforts continue and any subsequent payments received are credited back to the relevant holders.

What percentage of my investments should I expect to default?

Losses are disappointing, but unavoidable in lending. Since inception, the total write-off rate for BondMason investments is just 0.2%.  We currently have just 1.2% in recovery, the majority of which we expect to repay in full. 

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