Category: Investor Briefings & Information
Trading methods, portfolio & investment performance news for Retail & Institutional Investors
IMPORTANT INVESTOR NOTICE:- The articles in this section should not be read in isolation. Credebt Exchange® will only accept direct investment from qualifi ed, professional Investors and all investors, regardless of circumstance, are advised to consult a qualifi ed financial advisor or accountant. All Investors should read and understand the ETR Overview and associated links, information, contracts and the Master Agreement before deciding to invest in, and purchase, ETR.
2015-Q3 ETR Briefing
Investabill ETR are fixed value Exchange Traded Receivables, that are Loans or Bills issued under Contract for goods and services supplied to investment quality† companies, or credit insured invoices from Investment Grade [IG] insurers. As at Q3, Credebt Exchange® held RSA of EUR 63.3m+, with EUR 13.2m allocated and EUR 1.39m of Investor redemptions transacted. 9-Quarters trading totalled EUR 54.4m+ trades with all available ETR utilised.
Treasury performance down 12.1% to 87.1% at EUR 10.7m of settled ETR due to RPA ending & new RPA replacements.
Performance 2015-Q3 ETR trade value dropped 10.7% below Q2 due to seasonality & RPA expirations. Total creditors & debtors increased to 1,100+ with a total YTD trade of EUR 30.8m. Daily volumes increased by 17.4% on Q2. Highest single value trade was in September at EUR 0.21m. Total current RSA increased 16.4% to EUR 63.3m+
Trend Yield continued to trend downwards and dipped below predictions of 3.25% at an average yield of 3.24% for Q3. Yield will stabilise at this rate until Y/E. Continued strong Originator supply expected for remainder of 2015. Additional capacity for RPA in excess of EUR 84.7m+ available in Q3 with new institutional demand of EUR 20.0m+ remained ‘subject to contract’ for the period.
† Investment quality is a combination of Investment Grade [IG] organisations & other credit worthy organisations, as determined by AIG and other credit rating providers, from time to time
2015-Q2 ETR Briefing
Investabills are fixed value Exchange Traded Receivables [ETR], that are Loans or Bills issued under Contract for goods and services supplied to investment quality† companies, or credit insured invoices from Investment Grade [IG] insurers. As at Q2, Credebt Exchange held RSA of EUR 54.3m+, with EUR 9.9m allocated and EUR 0.63m Investor redemptions requested. 2-Years trading celebrated with EUR 43.0m+ ETR trades and all available ETR utilised.
Treasury management almost achieved parity with ETR settled at EUR 9.9m, or 99.5% of all outstanding trades.
Performance 2015-Q2 continued strong growth in ETR trade with an increase of 19.9%. Total Creditors & Debtors numbered 930+ with a total YTD trade of EUR 19.4m. Daily volume increased by 59.1% on the previous quarter. Highest single value trade was in June at EUR 0.28m. Total current RSA are valued at EUR 54.3m+
Trend Yield trending downwards from an average of 3.52% and is expected to average 3.25% in Q3. Volumes increased by 59.1% with continued strong Originator supply expected for 2015. Additional capacity for RPA in excess of EUR 52.3m+ is expected in H2 with new institutional demand of EUR 10.0m remaining confirmed during the quarter (subject to contract).
† Investment quality is a combination of Investment Grade [IG] organisations & other credit worthy organisations, as determined by AIG and other credit rating providers, from time to time
2015-Q1 ETR Briefing
Exchange Traded Receivables [ETR], are Loans or Bills, the “Investabills”, issued under Contract and such Investabills are payable by investment quality† companies, or credit insured Investabills from Investment Grade [IG] insurers. As at Q1, Credebt Exchange held RSA of EUR 36.1m, with EUR 6.5m allocated and EUR 0.2m Investor redemptions requested. The full spectrum of available ETR was utilised.
Strong treasury management continues to improve ETR settlement to EUR 5.4m, or 83% of all outstanding trades.
Performance 2015-Q1 started considerably stronger with an overall trade increase of 19.9%. Total Debtors numbered 560+ with a total trade of EUR 6.7m. Daily volume increased by 95.3% on the previous quarter. Highest single value trade was in November at EUR 0.24m. Total current RSA are valued at EUR 36.1m+
Trend Yield remained stable for the quarter at an average of 3.42%. Originator trading volumes increased by 95.3% with continues strong Originator supply expected for 2015. Additional capacity for RPA in excess of EUR 50.0m+ are expected in 2015 with new institutional demand of EUR 20.0m remaining confirmed during the quarter (subject to contract).
† Investment quality is a combination of Investment Grade [IG] organisations & other credit worthy organisations, as determined by AIG and other credit rating providers, from time to time
Credebt Exchange
Since its foundation in 2011, Credebt Exchange® has been purchasing invoices on a revolving basis from Originators that are members of the Exchange. These invoice, or Exchange Traded Receivables [ETR], are payable by the Originators’ customers, or Debtors.
Effective 16 January 2015, Credebt Exchange Limited, with company registration number IE501210, officially changed its name to Credebt Exchange Limited. Credebt Exchange will continue the Credebt Exchange business model and will add a new product that pays Originators’ suppliers, or Creditors, too. The improved business model of paying Creditor invoices and purchasing Debtor invoices, led to the creation of the word: Credebt.
This blended business model is called Convertibill™ and is designed to further enhance cash flow for the Credebt Exchange Originators whilst also reducing their overall cost of funds. This is achieved by enabling Originators to offer their suppliers ‘payment on demand’ for a nominal discount. The discount is then offset against the cost of selling their customer invoices.
Over the coming months, wherever the Credebt Exchange name appears, it will be replaced by Credebt Exchange. Both new and existing Credebt Exchange Originators will be invited to avail of the payment on demand service for their suppliers and to continue sell their customer invoices using the Convertibill™ product offering.
During 2015-Q1, the Credebt Exchange extended product offering for Investors will be marketed under the product name Investabill™. As a sophisticated financial marketplace that facilitates the sale and purchase of Loans or Bills as Exchange Traded Receivables [ETR] or Investabills™. These ETR Investabills™ will continue to trade and generate the working capital Originators require.
2014-Q4 ETR Briefing
Exchange Traded Receivables [ETR], are Loans or Bills, the “Investabills”, issued under Contract and such Investabills are payable by investment quality† companies, or credit insured Investabills from Investment Grade [IG] insurers. As at Q4, Credebt Exchange® held RSA of EUR 23.6m, with EUR 5.6m allocated and EUR 0.2m Investor redemptions requested. The full spectrum of available ETR was utilised.
Strong treasury management continues to improve ETR settlement to EUR 4.9m, or 78% of all outstanding trades.
Performance 2014-Q4 was the fourth quarter and first full year of trading for the Exchange. Total Debtors numbered 480+ with a total trade of EUR 18.8m to Y/E. Daily volume increased by 16% on the previous quarter. Highest single value trade was in November at EUR 0.18m. Total current RSA are valued at EUR 23.6m+
Trend Yield remained stable for the quarter at an average of 3.47%. Originator trading volumes increased by 16% with continues strong Originator supply expected for 2015. Additional capacity for RPA in excess of EUR 50.0m+ are expected in 2015 with new institutional demand of EUR 10.0m remaining confirmed during the quarter (subject to contract).
† Investment quality is a combination of Investment Grade [IG] organisations & other credit worthy organisations, as determined by AIG and other credit rating providers, from time to time
2014-Q3 ETR Briefing
Exchange Traded Receivables [ETR], are invoices issued under Contract for goods and services supplied to investment quality† companies, or credit insured invoices from Investment Grade [IG] insurers. As at Q3, Credebt Exchange® held RSA of €21.8m, with €5.5m allocated and €0.6m Investor redemptions requested in the quarter. The full spectrum of available ETR was utilised.
Further Treasury improvement on ETR settlement at €4.4m, or 79% of all outstanding trades during the period. There continues to be no delinquent ETR recorded to date. Market conditions remain favourable and stable for 2014 to Y/E.
Performance 2014-Q3 was the third quarter of normal trading for Credebt Exchange®. Debtors increased to 390+ with the total trade value of €13.1m YTD. Daily volumes increased by 17% on the previous quarter, 2014-Q2. Highest single value trade was in July at € 0.38m. Total current RSA are valued at € 21.8m+.
Trend Yield remained stable for the quarter at an average of 3.614%. Originator trading volumes increased by 17% with strong Originator supply expected during 2014-Q4. Additional capacity for RSA in excess of €13.5m+ is expected in 2014-Q4 with new institutional Investor demand of €10.0m remains confirmed during the quarter (subject to contract).
† Investment quality is a combination of Investment Grade [IG] organisations & other credit worthy organisations, as determined by AIG and other credit rating providers, from time to time
Irish Times Investor Article
2014-09-23 Irish Times – Investors can capitalise on companies’ need for cash
Options for decent returns on investments are thin on the ground. Buying invoices is becoming more attractive. Getting a risk-free return may never have been more difficult for investors. Read more…
100+ Retail Investors
2014-Q2 ETR Briefing
Exchange Traded Receivables [ETR], are invoices issued under Contract for goods and services supplied to investment quality† companies, or credit insured invoices from Investment Grade [IG] insurers. As at Q2, Credebt Exchange® held RSA of €19.6m, with €4.7m allocated and €0.5m Investor redemptions requested in the quarter. The full spectrum of available ETR was utilised.
Strong treasury continues to improve ETR settlement at €3.0m, or 68% of all outstanding trades during the period. There continues to be no delinquent ETR recorded to date. Market conditions remain favourable and stable for 2014.
Performance
2014-Q2 was the fourth quarter of trading for Credebt Exchange®. Total Debtors numbered 350+ with a total trade value of € 12.2m to date. Daily volume increased marginally on the previous quarter, 2014-Q1. Highest single value trade was in June at € 0.17m. Total current RSA are valued at € 19.6m+
Trend
Yield trend stabilised early in the quarter at an average of 3.607%. Originator trading volumes increased slightly with strong Originator supply expected during 2014-Q3. Additional capacity for RSA in excess of €20.0m+ is expected in 2014-H2 with new institutional Investor demand of €10.0m confirmed during the quarter (subject to contract).
† Investment quality is a combination of Investment Grade [IG] organisations & other credit worthy organisations, as determined by AIG and other credit rating providers, from time to time
Year-1 Success
Credebt Exchange® completed its first full year’s trading today and has much to celebrate. Careful, prudent management of supply and demand enabled the Exchange to manage an orderly market whilst meeting both Originator and Investor expectations as published. From the outset, the management of Credebt Exchange® stuck to its principal aims of of ensuring Investor funds are protected at all times and that Investors’ yield is delivered. Coupled with this core objective, the Exchange also ensured that intelligent finance was delivered to Originators and finally, that the Exchange grew in line with expectations.
As can be seen from the 2014-Q2 Briefing, demand and supply continue to grow in parallel. Intermediaries demonstrated continued support for Credebt Exchange® with increased Investor funding combined with many Investors deciding to re-invest both their principal and yield for a second year.
Originators continue to seek out Credebt Exchange® as an alternative non-bank finance provider specifically because of its ease of use and swift execution service provision. During 2014-Q2 Originators from wide and diverse industry cross-sections joined the Exchange with particular interest from recruitment, services and export oriented businesses. During the Summer months, it is expected that Originators will increase by 15-20% with a total of 60% growth in new Originators expected before year-end.
All in all, Credebt Exchange® has clearly demonstrated its flexibility and capability and looks forward to strong expansion during its second year of trading.
2014-Q1 ETR Briefing
Exchange Traded Receivables [ETR], are invoices issued under Contract for goods and services supplied to investment quality† companies, or credit insured invoices from Investment Grade [IG] insurers. As at Q1, Credebt Exchange® held RPA of €5.2m, with €3.2m allocated and €1.0m Investor redemptions requested in the quarter. The full spectrum of available ETR was utilised.
Strong treasury management improved ETR settlement to €2.4m, or 68% of all outstanding trades during the period. There continues to be no delinquent ETR recorded to date. Market conditions are favourable and stable for 2014.
Performance
2014-Q1 was the third quarter of trading for Credebt Exchange®. Total Debtors numbered 280+ with a total trade value of € 8.1m to date. Daily volume declined for the period at 25+ due to i-ETR suspension. Highest single value trade was in January at € 0.25m. Total current RSA are valued at € 15.5m+
Trend
Yield trending downwards at an average of 3.75% during the quarter. Originator trading volumes remained unchanged, with significant Investor redemption requests in January. Originator demand remains strong for 2014. Additional capacity for RPA in excess of €25.0m+ are expected in Q2-2014, subject to Institutional Investor demand.
† Investment quality is a combination of Investment Grade [IG] organisations & other credit worthy organisations, as determined by AIG and other credit rating providers, from time to time
2013-Q4 ETR Briefing
Exchange Traded Receivables [ETR], are invoices issued under Contract for goods and services supplied to investment quality† companies, or credit insured invoices from Investment Grade [IG] insurers. As at Q4, Credebt Exchange® held RPA of €4.3m, with €2.7m allocated during the quarter. The full spectrum of available ETR was utilised and all currency exposure was hedged.
Settled ETR totalled €1.9m during the period, representing 36% of all outstanding trades. There continues to be no delinquent ETR recorded to date. Overall market conditions are favourable, with strong growth expected for 2014.
Performance
2013-Q4 was the second quarter of trading for Credebt Exchange®. Total Debtors numbered 270+ with a total trade value of € 4.8m to date. Daily volume remained steady in excess of 1,300+. Highest single value trades were in October & December at an average of € 0.15m. Total current RSA are valued at € 15.1m+
Trend
Yield trend stabilised at an average of 3.75% during the quarter. Originator trading volumes continued on a slightly upward trend, with Investor demand slowing in December. Originator demand for 2014 will be strong. Additional capacity for RPA contracts of €10-15.0m are expected in Q1-2014, subject to Institutional Investor demand.
† Investment quality is a combination of Investment Grade [IG] organisations & other credit worthy organisations, as determined by AIG and other credit rating providers, from time to time
50+ Retail Investors
Today the Exchange received funds from it’s fiftieth Retail Investor. Since the first date of trading on 4 July of his Year (see article: First RSA/RPA Trade Executed), achieving 50 Retail Investors demonstrates a strong appetite amongst the investment community for strong, short term cash-equivalents such as ETR….
2013-Q3 ETR Briefing
Exchange Traded Receivables [ETR] are invoices issued under Contract for goods and services supplied to investment quality† companies, or credit insured invoices from Investment Grade [IG] insurers. As at Q3, Credebt Exchange® held RPA of €3.2m, with €1.7m contributed during the quarter. The full spectrum of available ETR was utilised and all currency exposure was hedged
In September, Credebt Exchange® introduced Instalment ETR [i-ETR] with Standard & Poor’s AA- or X2A Long-Term rating. i-ETR are invoices under Contract payable on an instalment basis (e.g. insurance premiums/asset purchases)
Performance
2013-Q3 was the first quarter of trading for Credebt Exchange®. Debtor numbers to the end of September were circa 200. Daily volume rose sharply with total recorded trades in excess of 1,300+. Highest single value trades were in July and September at an average of € 0.4m. Current RSA valued at € 13.1m+
Trend
Yield continued to trend downwards during the quarter, reflective of prevailing deposit rates. Volume of Originator trading continued a steady trend upwards with Investor demand slowing in August and returning to steady growth in September. Outlook for Q4 is medium to strong with immediate, additional capacity for RPA contracts of €3-5.0m
† Investment quality is a combination of Investment Grade [IG] organisations & other credit worthy organisations, as determined by AIG and other credit rating providers, from time to time
The SB³ Trading Algorithm
The Sell, Bid Bumps & Buy [SB³] algorithm uses two mathematical calculations to regulate efficient, and smooth, trading in volume. The SB³ algorithm injects simple ingenuity into the practical issues of operating an efficient Exchange. The components of the algorithm are:
- Sell
- Buy
- Bid Bumps
Sell
Originators want a simple, fast, efficient and most importantly: reliable source of alternative working capital. This can only be achieved in one of two ways, either by having:
- sufficient deposits ‘waiting’ to be approved and lent (by a bank, for example)
- committed funds that are delivered automatically, subject to meeting specific criteria
As Credebt Exchange® is not a deposit taker or lender, it can only achieve the second alternative if it has the requisite funds committed for automatic delivery. One requisite component for the success of Credebt Exchange® relies on its ability to control the Sell (i.e. the Originator offer) price. The Sell price Minimum Offer stop setting is controlled from the Back Office.
Buy
Investors, provided with choice, will naturally ‘rush to quality’, meaning that they will always seek Investment Grade [IG] with the highest yields, first. This causes a trade imbalance where medium and low IG yields force ‘heavy discounts’ onto Originators. Together, these result in Originators’ Sell price erosion to unacceptable levels and ultimately, may destroy the Exchange business proposition.
To prevent this, the Exchange must focus and adequately deliver on the Investors’ primary requirements for yield and capital protection. During the negotiation of the Buy rate with the Retail Investors/intermediaries, they commit to automated trading in the Revolving Market. This confirmation occurs during the Investor signup process where the acceptance of automated trading, at the negotiated Buy rate, and is activated using the “I Agree” button. The second requisite component for the success of Credebt Exchange® is achieved by its ability to control the Investor bid and Buy price. The Buy price is then automatically manipulated by the two Bid Bump components of the SB³ algorithm.
Bumps
Investor automated, positive or negative, bidding adjustments, or Bid ‘Bumps’, occur using two variables in the SB³ algorithm, namely the:
- CDP Fixed Variable
- Order Floating Variable
CDP Fixed Variable
Credit Default Protection [CDP] is the Credebt Exchange® trade name for credit insurance. Organisations like AIG provide credit insurance to thousands of companies. Like Credebt Exchange®, their risk exposure is to the Debtor. OngThe AIG OnRisk insurance policy, written specifically Credebt Exchange® Master Agreement, provides CDP to Retail Investors on the Exchange. In the event that any Debtor fails to Settle (i.e. pay in full) their ETR, AIG pays 90% of the Face Value of the ETR.
When an Investor buys an ETR, they pay the Purchase Price (i.e. a discounted amount) of the Face Value. The Purchase Price is calculated as follows:
Purchase Price = Face Value
1+((180/360) x (Buy Price x 12)))
On average, the Purchase Price will be about 90.000% of the ETR Face Value. In such an example, if an ETR fails to Settle, the Investor’s risk exposure would be 0.000%. Therefore, to completely eliminate the Investor’s risk exposure, the Buy Price must be increased by a CDP Fixed Variable percentage to ‘fill the gap’. The CDP Fixed Variable increase is the first Bid Bump.
Order Floating Variable
There is no sure method of predicting what ETR value a Originator will post to the Trade Floor. Equally, there is no practical and efficient method of automatically matching the total value of any single Investor’s funds to the exact same and equal value of a collection of ETR†. To maintain the negotiated Investor return for a fixed period the ‘gap’, created between their purchased ETR and the total value of their fund, must be eliminated. As ETR Settle and new ETR are purchased, this gap will frequently fluctuate throughout the fixed period. Each specific Investor will have a different and changing percentage that is called the Order Floating Variable.
SB³ Algorithm Result
The unpredictability of the Order Floating Variable creates a true random number. Its unpredictability is combined with the CDP Fixed Variable to produce a single SB³ algorithm result. This truly random figure is then used to create a truly random set of multiple, automated Investor Bids that:
- creates volatility and/or liquidity on the Exchange;
- prevents reverse engineering for price derivation;
- drives the ‘best Buy price’ towards Originators;
- ensures no Originator Offer is left without a Bid;
- maintains Investor yield at all times;
- mitigates Investor risk; and
- enables institutional Investors to manually trade the volatility
Related articles
ETR Overview
Credebt Exchange® was founded in 2011, specifi cally to address two important issues in the economy: 1. liquidity in the micro-medium business sector; and 2. providing a strong, stable, cash equivalent alternative to bank deposits for Investors. Trading commenced in July, 2013 and Credebt Exchange® continues to deliver on its commitments to both businesses and Investors.
The Investor’s yield is achieved by purchasing Exchange Traded Receivables [ETR] at a discount. As explained in the ETR Fact Sheet, ETR are invoices issued under Contract for goods and services supplied to investment quality companies or credit insured invoices from Investment Grade [IG] insurers. ETR provide Investors with:
Protected
- ETR payable by investment quality Debtor companies
- 100% ETR Repurchase (see AIG in the ETR Fact Sheet)
- 4-Tier capital protection (see ETR Overview)
Liquid
- Using RPA, typical investment period is 1-Year revolving
- Full or partial redemption available on request
- No ‘break charges’ or early redemption fees
Tax Effi cient
- Signifi cantly tax effi cient for individuals with annual exemption
- Subject to status, may be o -set against capital losses
- Individual’s return taxed as a capital gain
Yield
- Substantial increase on comparable bank deposit rates
- Capital not committed for long periods, or years
- Higher yield than alternative cash equivalents
GLI Finance AIM: GLIF
Today and subject to final contract, GLI Finance Limited (AIM: GLIF) signed an agreement to act as the lead Investor to provide €25.0m of funding to the Exchange. This will bring the total year-to-date funding on the Exchange to €30.m and provides for a further capacity to purchase in excess of €150.0m ETR during 2014.
GLI Finance is a Guernsey-domiciled loan company listed on the AIM market of the London Stock Exchange (ticker GLIF). The Company’s objective is to produce a stable and predictable dividend yield, with long term preservation of net asset value. This the Company aims to achieve through the provision of secured lending to small and medium sized companies with the view to exit the CLO business over time and focus on the provision of alternative finance to SME’s.
The Company Strategy is to become a leading alternative provider of SME finance and in the last year the Company has made significant strides to achieve this by completing a number of partnership transactions with lending platforms. The platforms which have been invested in vary by geography, industry, size of lending and by type of lending. These include Global trade Finance, UK SME Lending, Offshore Lending, UK invoice discounting, European invoice discounting, Global multi-asset crown funding and UK property-backed lending.