New „Easy Invest“ product – We reinvented bonds!
Debitum is happy to announce that the way new product on the market „Easy Invest“ is already launched! By this new product, Debitum gives investors the same tool that professional investors have been using for many years – a classic bond structure.
The bond structure is well-known in the professional investor world. But the paper workflow, once a month subscription model, and a lot of handworks made it heavy, long, bureaucratic and accessible only through bankers and offline. With new technologies and fintech approaches we reinvented bond and made it accessible for all.
What are the benefits of investing in “Easy invest” products instead of regular loans?
It’s easier to understand. You just need to pick a loan originator and read the scorecard prepared by our team. No need to read about each individual loan and final borrower anymore.
Easier to invest. Just simply choose the duration of investment (3,6,12 or 24 months), see the interest rate depending on Loan Originator rating and tenor of the investment, and invest in one click that corresponds to your risk appetite.
Easier to forecast a cash flow. Interest will be always paid monthly, principal – at the end of term, so you will always know when you can expect the invested funds back.
Diversify investments. While investing loan by loan gives you the illusion of diversification (you still invest in a portfolio of the same Loan Originator) and in case of final borrower default, you wait for buyback to happen. In our new product, we transparently say: you finance Loan Originator, and your investments are securitized by a portfolio of many assets in the pool. This is how real diversification works.
With one investment investor automatically invests in many loans. If an asset is pooled by 10 loans, then users invest in every loan under the asset and thus get the diversification.
Security. Every asset will be backed by a minimum of 100% of collateral, the risk to lose money is minimized as Loan Originator is responsible to repay the loan. Even if one final borrower defaults, under this new product Loan Originator will be responsible to substitute the defaulted asset/pledge and repay the loan in agreed terms.
Value of the security. Value of the security (collateral value) refers to the amount of assets that have been put up to secure the investment. It is expressed as a collateral coverage ratio = value of collateral divided by loan size.
The risk of investment. The risk for all final borrowers to default is very small. We continue evaluating every loan in the pool and won’t pool “bad” loans. Additionally, every Loan Originator goes through a due diligence process every quarter. It means max security – evaluated loan originator and evaluated and pooled loans.
Easier to manage in size, share, and duration. With the help of” Easy Invest”, Debitum investors can diversify their portfolio with ease. Forget about picking individual investments from Debitum’s extensive list of opportunities and trying to balance the portfolio, investors can simply invest in preferred loan originators. Instead of balancing among tens of different assets, an investor can invest a specific portion of his balance in an investment that is backed by a pool of different loans from the preferred loan originator. This is diversification at its finest! For instance, if you have 1000 EUR on your account, you can invest 250 EUR in four different “Easy Invest” investments from different Loan Originators. By doing this, you will easily and equally diversify your portfolio among different Loan Originators, each Loan Originator will account for 25% of your portfolio and your investments will be covered by a pool of different under assets.
Risk score
With the introduction of the new product “Easy invest”, Debitum has evolved its risk assessment practices and introduces a Trust score. To represent the risk level more accurately for “Easy invest”, we have moved away from the evaluation of individual loans to the evaluation of Loan Originators. Trust score will include not only the already known 3rd party risk assessment for underlying assets, but multiple other due diligence sections developed to better assess the Loan Originator’s performance as a whole. Since the launch of the platform, Debitum has been mostly internally using Trust score for Loan Originator evaluations and it has proved to be a reliable process that we are even developing further as a standalone risk assessment tool. With the introduction of “Easy invest”, Debitum will present an adaptation of this score as Trust score.
Disclaimer: Investments in financial products are subject to market risk and any investment should only be done with risk capital. The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.