Secondary market transactions slow down

After last month’s long awaited increase in activity on the secondary market, August reverts back to a lower level of activity—going back to the trend we’ve been seeing since April. However, despite the decline, a total volume of €433,001.48’s worth of transactions took place on the secondary market in August.

Transactions on the secondary market have slowed down in August - Bondora
Transactions on the secondary market have slowed down in August – Bondora

As in July, manual transactions saw a decline (28.7%), but it still has the biggest share of transactions (40.2%). July had an increase rate of 3% in transactions, whereas August saw a decline of 20.7%. This lack of secondary market activity could indicate one of two things. Investors are either deciding to use our hands free investment option (Go & Grow) or Portfolio Manager’s semi-automated investment process. Or they’re not transacting manually and rather letting their money work for them in a passive way.

Sec Market total volume Aug 2020

Current Loans

Manual transactions had a 32.6% market share, and Portfolio Manager had 42.3%. The latter thus takes the biggest market share, swapping places with each other from last month. The API had a 9.7% decline in numbers, but it has taken up a bigger space in the market, growing from 20.9% in July to 25.1% in August.

In August, investors bought and sold at an incredible discount rate. 9.2% of transactions were done at discount – growing 7.2% on-the-month. 56.6% of loans were sold on par, and 34.2% of transactions were sold at a premium. Portfolio Manager transactions totaled €155,569.28.

Sec Market current loans Aug 2020

Overdue Loans

The main source of overdue loan transactions are still manual transactions, taking up even more of the category than last month. In July it had a total share of 80.2%. In August, this number rose to 81.0%. Just like last month, overdue loans tend to be sold at discount, making up 77.1% of the transaction, which is equal to €22,818.4. The total value of transactions on overdue loans was €29,591.26.

Sec Market overdue loans Aug 2020

Defaulted Loans

Continuing the see-saw trend we’ve been seeing for three months, defaulted loans remain a fickle territory. After declining to €22,896 in July, it sky-rocketed again last month by 56.9% to €35,929.16. This month, we’ve seen the largest percentage of discounted transactions of the quarter (98.5%) totaling €35,389.24. API activity continues its growing streak from June. It grew by 65.0% from €3,517 to €5,804.5.

Sec Market defaulted loans Aug 2020

Secondary market slows down again

Last month’s increase was a pleasant change in the declining trend we’ve been seeing in secondary market transactions, but August has taken a dip again. As mentioned earlier, this trend of a quieter secondary market could indicate two things: Instead of manually transacting on the secondary market investors are choosing Go & Grow for its simple hands free investment offering or Portfolio Manager’s semi-automated investment process. Or they’re letting their investments be so they can generate returns passively.

Always remember, investors should not seek higher returns from buying and selling loans on the Bondora secondary market.

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