The team at Lithuania-based financing platform Debitum recently published their platform statistics update for June 2021.
As noted in a blog post by Debitum, the month of June was a relatively calm or quiet month for the platform. However, their team continued working hard to offer users the best investment opportunities.
As stated in the update:
“Together we achieved another milestone and exceeded the 7000 number of users threshold.”
As revealed in the update, there are now 7215 registered users on Debitum (as of July 14, 2021). The platform’s management reports nearly $8 million in deposits.
There were $1.9M worth of loans originated in June which is significantly lower than $3 million in May but considerably greater than $1.07 million originated in April 2021, Debitum reveals.
While sharing a breakdown of loans provided by each loan originator, Debitum reports that Chain Finance offered 12.36%, Triple Dragon offered 15.49%, and Flexidea offered 72.16%.
Notably, a total of $32.8 million has now been invested via the platform. For details on the percentage of investments into loan originations via Debitum and the percentage of investments into different industries, check here.
In another update, Debitum writes that new products entering the market tend to bring new types investment along with different rules and conditions. Debitum says that it always encourages its clients and partners to research what’s new and to become familiar with the basic concepts and what they actually mean.
As explained by Debitum, structured products are typically provided by banking institutions and investment brokers and have usually been pre-packaged investments that may include two or more assets “linked to interest plus one or more derivatives sometimes.”
As noted by the company, structured products are usually tied to an index or basket of securities and have been specifically designed “to facilitate highly customized risk-return objectives.” The financial return is “derived from the performance of the underlying assets” and the initial investment is “repaid in full, and anything more is dependent on the performance of the underlying assets.”
Debitum further noted:
“Securitization offers opportunities for investors and frees up capital for originators, both of which promote liquidity in the marketplace. A marketable financial instrument is created by merging or pooling various financial assets into one group. This group of repackaged assets is made available to investors. Securitization is most often associated with loans and other assets that generate receivables such as different types of consumer or commercial debt.”
The firm holding the assets (the originator) usually collects the data on the assets it plans to remove from its associated balance sheets. This then turns into a reference portfolio, which is then “sold to an issuer who creates securities to trade with,” the company added while noting that these securities are “in fact stakes in the portfolio’s assets, which investors can buy for a specified rate of return.”
Debitum further explained that the portfolio is “often split into tranches (portions) and the tranches differ according to what they contain and as a result, offer varying amounts of risk.”
The platform’s management also noted that tranches that “contain assets with a higher credit rating are known as senior tranches.” They are “deemed the least risky and any losses on the value of the security are only experienced in the senior tranche once all other tranches have lost all their value,” the company explained. It also mentioned that as a result, senior tranches “pay the lowest rate of interest.” Consequently, a junior tranche has “the most risk but pays a higher return on the initial investment,” the update noted.
As explained by Debitum:
“The success of any investment depends on the performance of the particular business loan. So while investment can grow in value it can also depreciate in value based on the economic situation of the country in which the borrower or loan originator is situated.”
The Loan Originator has “to provide 100% collateral coverage particularly in the event that the borrower is unable to repay the loan. Although buyback is desirable, it is not guaranteed, as it is also dependent on the financial situation of the loan originator,” Debitum noted.