Ladies and gentlemen, the private credit market explained, in two charts.
Left: distribution of private ratings. Vast majority of B and below.
Right: private ratings severely underestimate default risk for ratings... of B and below.
Thanks for listening to my TED talk.
@jeuasommenulle Perhaps CI is a double agent: https://t.co/kZEeuWRfO1
"The consultancy’s analysis shows the average total instalment cost (TIC), or the extra amount paid for choosing monthly payments over a lump sum, dropped to 10.1% in the past 12 months, down from 11.3%"
@jeuasommenulle@Alea_@MartinSLewis For me the difference between Annual -> Monthly and Monthly -> Monthly was 1.8%. Suggesting alot of underwriting variabilities that aren't captured by a small sample size
@jeuasommenulle@Alea_@MartinSLewis Its a fine line, because if you have statistical data that shows that customers that usually pay monthly have more underwriting losses etc, then Mediobanca are conflating APR with insurance risk premium - the idea being you answer the questionnaire truthfully.
@jeuasommenulle You want to look at the VDP template, I believe that uses the bucketed approach. It would be more useful if they filled out the Glossary pages like they're suppose to.
@jeuasommenulle Distributed LTVs is where you take the loan and put each bit of it into each bucket starting from the bottom.
e.g. 1mm loan 75% bucketed LTV = 1mm goes in the 70-80% bucket. The full amount.
For distributed:
267mm goes in 0-20%
267mm 20-40%
267mm 40-60%
133mm 60-70%
67mm 70-80%
@jeuasommenulle Also worth highlighting the soft limited on LTVs for German Pfandbrief is 60% - so you an see why there is such distributions.
This differs by country, but I'd prefer a cover pool that is static, and instead more collateral is required (e.g. Denmark)
@jeuasommenulle I could be wrong but I think you're looking at distributed LTV data and not bucketed LTV data (what we're used to looking at).
If this were bucketed LTV data 89.6% would be in the 50-60% LTV bracket.. not that it changes the point of your post.