When compared to last month, Bondora portfolio performance was relatively unchanged. This comes even as economies are slowing across Europe and investors are having trouble finding solid rates of return.
As always, performance charts by country are broken down by number of loan issuances over the given period, with Orange representing <50 loans, Blue 51-200, and White >200.
Yearly Performance
A 21.4% rate of return in May was down 0.3% from a month prior. This is still well above the 13.4% target rate for the year, as returns in each country were above their target rates. Returns for 2018 and 2017 were both down by 0.5% on the month.
Quarterly Performance
Returns for each quarter of 2018 were each down by less than 1% in May. Still, returns across all quarters of 2018 are still above their target rate.
Finland
Returns for AA rated Finnish loans were up for Q4 in 2018, while returns in the remaining categories dipped slightly, but remained relatively constant.
Estonia
Returns in the most recent quarter for loans out of Estonia were relatively unchanged, fluctuating less than 1% in all ratings categories. The same goes for the previous quarter, Q3 2019. This stability is a welcome sign for investors as it points to consistent, reliable returns for loans issued to borrowers in Estonia.
Spain
Spanish E rated loans had an increase in returns for the past two quarters, up to 36.56% and 42.08% respectively. F and HR rated loan returns dropped slightly, but are still extremely high, above 44% for the most recent quarters. These returns are almost double their expected target return rate.
Economic News
It appears Finland’s economy underperformed in the first quarter of 2019. According to credit rating agency DBRS, this comes on the heels of a great deal of uncertainty. “External uncertainties over an escalation in protectionism and a no-deal Brexit continue to weigh on economic sentiment in the EA and on the manufacturing sector,” DBRS reported in a press release. A bad first quarter also led the country’s central bank to downgrade its growth forecast for the year to 1.6% from 1.9%, and its 2020 forecast to 1.5% from 1.7% previously.
The economic growth rate in Estonia is also expected to decelerate. Growth for the current year is expected to come in at 3.3%, but that rate could decline to 2.1% and 2.0% over the next two years respectively. Even in economic decline, Estonian Prime Minister Juri Ratas expressed his continued support for the European Union. Ratas is looking for the countries in the EU to come to terms on economic reforms and budgets in order to continue to help all member-states.
Unlike Estonia and Finland, the economy in Spain is growing. The Bank of Spain revised its growth outlook for the country up by 0.2% to 2.4%. One of the biggest reasons for this increase is positive employment numbers in the country. In May, total unemployment fell by 84,075 and over the first five months of 2019 there was 2.45% increase in job contracts. Yet, the country is still under political unrest. Recently, one of the senior members of the country’s Ciudadanos party left the party over deals the party made with far right groups.
