PEER-to-peer property specialist Lendy is launching its first-ever bond, looking to entice less proactive fixed-income investors by providing indirect exposure to whole loans.
The P2P lending platform, formerly known as Saving Stream, is making its first foray into the bond market by soft launching one-year and three-year notes that will yield five and six per cent returns respectively.
The move provides a very attractive investment to typical bond buyers interested in less-actively managed products, Lendy said.
“The bond is attractive for investors who want exposure to property without the hassle of regularly having to buy and sell individual property loans,” a spokesperson told Peer-to-Peer Finance News.
The notes will yield lower returns than direct P2P investment through the platform, but easier access to secondary market liquidity.
“The structure of the bond is in contrast to some of the higher returns available on certain individual loans from the company, which are typically short-term property loans requiring active management by the investor, and which may often include periods where funds are not invested,” the spokesperson added.
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Contrary to Lendy’s loan auctions, which can be heavily oversubscribed – sometimes by more than 200 per cent – the bond notes will allow clients to invest as much as they want at any given time.
They will also guarantee the same secured structure as the whole loan investment, as they will be fully backed by the same real estate assets.
“This means that, in the event of a default, there is expected to be sufficient equity to allow loan funds to be recouped with the sale of the security,” the spokesperson said.
The platform’s debut bond fits with its plans to adjust its interest rates in order to triple its monthly lending to between £20m and £25m.
The spokesperson said that the platform plans to reduce its average investor returns, so that it can lower the rates it offers borrowers and originate more loans. This in turn would help Lendy continue to grow and remain profitable, the spokesperson added.
This article was first featured in the April print edition of Peer-to-Peer Finance News. For more information on receiving the monthly print magazine, complete with exclusive content, email firstname.lastname@example.org.