Over this past year, the MonJa team has provided our credit risk insights (and our intern’s cartoon drawings) on our company blog. Investors and partners often refer to these entries (common comment: “Your team really knows what it’s talking about…” Well geez, thanks. Only been in credit risk analytics for 20 years…). These comments have led to richer conversations on how investors can strategically increase their returns. With the end of the year approaching, we are highlighting out most thought-provoking and discussed entries. Based on Google analytics data and outside conversations, these were our top blog posts this past year:
1- Are You Buying The Wrong Loans? A Pricing Analysis of Lending Club Loans
This post previews our interactive pricing tool, which investors use to see how Lending Club prices their loans. The three main takeaways are a positive risk premium, positive term spread, and higher term spread in low grades. Try our tool here.
2- How Does Madden vs. Midland Affect Marketplace Lending Investors?
A much-debated topic, the Madden vs. Midland case was highlighted at every marketplace lending conference we attended this fall. A Madden Reset would have a significant impact on an investor’s portfolio. We use a static-replication rational pricing method to estimate the haircut of newly issued notes right after a reset occurs. Read more here.
3- 4 Ways An Interest Rate Hike Will Impact Investors
[Originally featured in Orchard Platform’s Thought Leadership Series] With the upcoming expected interest rate hike, how will marketplace lending be affected? From an investment credit risk and analytical perspective, there are certain events institutional investors should be prepared for. The shorter end of the yield curve is most sensitive to the Fed rate increase, and we investigate how the upward shift in the yield curve will impact marketplace lending in the following four areas- price return risk, reinvestment risk, prepayment risk, and credit risk. Read more of our insights.
After a year of serving institutional investors (MonJa launched in 2015), we have a greater understanding of our customer’s pain points. In the coming year, you can expect an even deeper dive into our loan portfolio monitoring. Let us know if there are specific topics you’re interested in, and we’ll be happy to share more.