MORE than 10 per cent of BondMason’s portfolio is on a watchlist to monitor loans that are at risk of falling into arrears or default.
The direct lending investment manager operates a watchlist that monitors adverse issues such as whether a loan goes over term or misses a repayment.
Loans are put on the watchlist if the investment team believe they are at risk of non-performance and are then put in recovery if steps are taken to ensure funds can be returned to investors.
BondMason said 12.7 per cent of its book is on the watchlist, of which 7.5 per cent is being monitored and five per cent is in recovery.
“The investment team closely monitor all underlying loans,” BondMason said.
“Because we adopt a ‘hair-trigger’ approach for our watchlist designation, approximately 15 per cent of underlying loans available through the BondMason platform tend to be classified as watchlist at some point during their life with us.
“Although this may appear to be a high proportion, it ensures that we are focused on any potential non-performers quickly.
“Should the team discover a material piece of adverse news, the underlying loan is classified as recovery.”
At this point, BondMason said, the team liaises more closely with the lending partner to ensure that everything possible is being done to recover its clients’ investment.
“A loan designated as watchlist or recovery, means that it cannot be sold to someone else and will be held until such time as the underlying loan is remedied or redeemed,” BondMason said.
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The firm added that loans have historically still repaid even if they have gone onto the watchlist.
In 2018, an average of 6.6 per cent of total investments were in recovery and 5.56 per cent were on watchlist.
Of these, 50 per cent of watchlist loans repaid within three months and 75 per cent repaid within a seven-month period.