3. THE T.I.N.A. GAME
3www.P2PLendingItalia.com
Source: Exane BNP Paribas estimates based on Bloomberg data as of 24 Nov 2016, P2PLendingItalia.com
«T.I.N.A. – There Is No Alternative – seems to be the investment strategy du jour»
Santiago López Díaz – Exane BNP Paribas
DURATION OF NEGATIVE YIELDING BONDS (NUMBERS OF YEARS) - RED (NEGATIVE) / GREEN (POSITIVE)
Bond Duration (# of years)
Country 1 2 3 4 5 6 7 8 9 10 15 30
Switzerland
Japan
Germany
Netherlands
Austria
Denmark
Belgium
France
Sweden
Finland
Spain
Italy
UK
USA
4. CBs HAVE DIVIDED INVESTORS...
4www.P2PLendingItalia.com
Source: Epsilon Theory – W. Ben Hunt, Ph.D., Compass AM
“There are ZERO income seekers holding negative rate bonds”
W. Ben Hunt, PH.D. – Salient Partners
ü Short-term owners
RETURN SEEKERS
ü Sticky owners
INCOME SEEKERS
Central Banks’ balance sheet expansion and impositionof negative rates are great if you are a returnseeker; that’s terrible, however,if you are an
investor looking for income fromyour portfolio...
5. ALTERNATIVE CREDIT – A NEW ASSET CLASS (i)
5www.P2PLendingItalia.com
Source: Exane BNP Paribas estimates Sept 2016, Deutsche Bundesbank, P2PLendingItalia.com
“If credit were like any other good, one would expect that if prices increase in line with risk there
should still be actors willing to provide it. However [...] even banks with a clear legal mandate to accept
all customers [...] arenot willing to provide credit to this slice of the market.”
Deutsche Bundesbank – Discussion Paper: “How does P2P Lending fit into the consumer credit market?”
Born in the A.C. – After Crisis (i.e. post 2008) – era from the gradual,unstoppable, fragmentation/dissolutionof traditional banking models...
“HOW MUCH CAPITAL IS ENOUGH?” - TOTAL ASSETS / TOTAL EQUITY OF SPANISH BANKS:
6. ALTERNATIVE CREDIT – A NEW ASSET CLASS (ii)
6www.P2PLendingItalia.com
Current relative advantages:
i. Not distorted
ii. High premium vs Government bondyields
iii. Can be securitised
iv. Generally (still) not crowded
v. Can be supported by collateral guarantee
… And disadvantages:
i. Illiquid / less liquid
ii. Requires a lot of bottom up analysis effort
ALTERNATIVE
CREDIT
7. WHERE SHOULD WE FOCUS?
7www.P2PLendingItalia.com
i. Invoice purchasing
ii. Personal loans
iii. Collateralized direct loans
iv. SME loans
v. Etc…
DIRECT LOANS
ü STRUCTURAL
ü GLOBAL
ü SEGMENTED
8. GLOBAL PICTURE - VOLUMES
8www.P2PLendingItalia.com
Source: University of Cambridge, KPMG: The 2nd European Alternative Finance Industry Report - Sep. 2016; P2PLendingItalica.com
1,13 2,83
5,433,24
9,65
33,58
4,13
20,29
94,61
0
20
40
60
80
100
2013 2014 2015
ONLINE ALTERNATIVE FINANCE VOLUMES 2013-2015 (€ BN)
Europe (inc. UK) Americas (inc. US) Asia-Pacific (inc. China)
9. EUROPE – VOLUMES
9www.P2PLendingItalia.com
Source: University of Cambridge, KPMG: The 2nd European Alternative Finance Industry Report - Sep. 2016; P2PLendingItalica.com
4348
319 249
50 32
0
1000
2000
3000
4000
5000
UK France Germany Spain Italy
ONLINE ALTERNATIVE FINANCE VOLUME BY COUNTRY 2015 (€ MLN)
11. INSTITUTIONAL MONEY vs RETAIL MONEY
11www.P2PLendingItalia.com
Source: Funding Circle, AltFiData, P2PLendingItalica.com
WHAT HAPPENS WHEN A SINGLE INVESTOR WANTS TODEPLOY €100M THROUGH A PLATFORM ?
… Originally it was “Peer-to-Peer lending” (Bob lending to Peter), but importantlywith institutional investors looking foryields, major P2P platforms
morphed into “Marketplaces”. MPLs will become most likelya replica of the traditional stock exchange model for this new asset class.
…Like in the stock exchange, the vast majority of volumes are deployed by institutions. The US is already
clearly evolving in this direction, with 80%+ of lending volumes now coming from institutions:
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
US Market UK (FundingCircle)
Retail Institutional
80%+ 50%+
12. PER CAPITA VOLUMES… ITALY vs EUROPE
12www.P2PLendingItalia.com
Source: University of Cambridge, KPMG: The 2nd European Alternative Finance Industry Report - Sep. 2016; P2PLendingItalica.com
65,9
4,8
3,1
1,1 0,5
0
10
20
30
40
50
60
70
80
UK France Germany Spain Italy
MARKET VOLUME PER CAPITA BY COUNTRY 2015 (€)
14. OUR VIEW...
14www.P2PLendingItalia.com
ü ONLINE DIRECT LENDING IS A GLOBAL
PHENOMENON
ü TRENDS ARE POWERFUL ... IN SPITE OF POSSIBLE
STOPs AND GOs
ü UK AND US ARE MUCH AHEAD: IT SEEMS AS IF THEY
ARE IN A TIME MACHINE PROJECTING THEM 5–10
YEARS IN THE FUTURE vs EUROPE
ü WE EXPECT CONTINUED EVIDENCE OFASSET
MANAGERS MOVING INTO THE ASSET CLASS