Ablrate – Invest in a P2P Loan With an Aircraft as Security
Ablrate is a new p2p lending service that launched this month in the UK. Ablrate is short for asset backed lending rate, meaning each loan will be backed by an security. The management has long experience in aircraft financing and consequently the first loan on the platform is secured by an aircraft. This loan offers 10% interest p.a. (paid monthly).
International investors welcome
Ablrate is open to non-UK investors (except from the US). Investors are not charged a fee to lend. The minimum bid is 100 GBP (about 125 EUR). After I signed up I used Transferwise to transfer money to my Ablrate account to avoid high banking fees (instead of doing a direct bank wire since I know from experience that UK banks do deduct heavy fees on incoming international transfers).
The P2P Lending Marketplace
Ablrate will offer two types of loan listings. Fixed rate listings will close once the loan amount is fully funded (the first loan is a fixed rate offer). With auction offers the lenders will underbid each other with lower interest rates once the loan amount is reached until the auction term closes. Ablrate has a secondary market where investors will be able to buy and sell loan parts.
First loan listing. Comprehensive detail information is available on the platform after registration and authentication.
My first impression of the platform is good. Very much information is presented in the extensive FAQ, the lender brochure (see How It Works > For Investors > at bottom) and several videos which illustrate the process. I made my first bid and am now waiting on the loan request to fill for the next step.
I did ask Ablrate about their relationship to Phoenix Aircraft Investments (UK) Ltd which is a sponsor and involved in the first loan and David Bradley-Ward, Director at Ablrate told P2P-Banking.com:
‘The aircraft industry can be a complex one and having a sponsor who essentially vets all deals and is even involved in them may look like a conflict, however, our major goal is to provide lenders with very high quality transactions and Phoenix have these in abundance. Phoenix are founder investors in our firm and we, as a management team, have worked with Phoenix structuring transactions, so we know them very well …
In all cases Phoenix will have their own money at stake also so we have that extra level of confidence that the deals being placed on the platform through Phoenix have been vetted, not only by any debt providers, and lawyers but by Phoenix themselves who have an economic interest in the success of the transaction. We will be opening the platform up to other lessors soon, but Phoenix will still vet these deals for quality and we would expect all aircraft transactions to have lessors own money involved.
From our point of view we feel this is a better proposition than those platforms that are churning out lots of loans for which there is no real skin in the game from the companies involved. We feel that being able to lend into a transaction that has had extensive professional due diligence completed, bank participation and real money committed from the lessor is something that de-risks transactions for our users and makes the interest being offered look very good indeed on a risk adjusted basis compared to transactions on other platforms of a similar size and interest rate’.
From experience with past aircraft financing deals Ablrate management expects repayment problems to be rare. The FAQ states: ‘Because of the asset backed nature of our loans and the other security we attach to such loans, (personal guarantees etc.), we believe our default rate will be very low. The experience of our aircraft lessor transactions have a default rate of 3 aircraft from 360 transactions, these aircraft were, however, released shortly after. This experience, and the experience of our Asset Leasing Agents/Sponsors leads us to believe that our default rate will be less than 1% and should a void period impact a loan in any transaction, the void period is estimated to be less than three months. … ‘