Risk and return on the Mintos Secondary Market


9 min.

Ever since the launch of Mintos, the Secondary Market has provided additional liquidity for investors. And with €208 836 worth of investments sold every day on average, the Secondary Market has proven to be very liquid. On the other hand, the Secondary Market can also offer attractive opportunities for investors. In this article, we’ll look at which types of deals investors might be able to find there, and how to evaluate their risk and return.

Key takeaways:

Reviewing information about the investment

Before you invest in any asset, you should familiarize yourself with the investment details and terms to make sure it matches your investment goals, preferences, and risk tolerance. In this section, we’ll go over the information that’s available for investments on the Mintos Secondary Market.

Information source #1 – the Notes listing

Let’s start with the Notes listing. This is where investors can find a lot of important information laid out in a table that makes it easy to compare different investments. Investors will land on this view directly upon accessing the Secondary Market.

In the Notes listing, investors can find key information about the listed Notes:

  • The ISIN (International Securities Identification Number) uniquely identifies a specific security. Each Set of Notes on Mintos has its own ISIN allocated by NASDAQ.
  • Type indicates the type of the underlying loans.
  • Mintos Risk Score rates the risk of investing in a Set of Notes. You can read more about the Mintos Risk Score on our website. We’ll also provide a short summary below.
  • Lending company lists the company issuing the underlying loans and the country in which the loans were issued.
  • Remaining term lists the remaining period (months and days) left until the underlying loans are fully repaid.
  • Late loan exposure is the ratio of underlying loans that are late, calculated on the remaining principal.
  • Interest rate is the annual gross interest rate paid to the investor. This rate does not include any fees or estimated losses.
  • YTM (yield to maturity) is the expected annualized rate of return if the investment is held until maturity. YTM is one of the most important parameters, and we’ll explain more about it below.
  • Available for investment lists the remaining nominal amount of Notes available for investors.
  • Price / Discount lists the price of the available Notes including any discounts or premiums. The percentage in parentheses indicates a premium (red) or discount (green), or par (black).
  • Notes that include loans with a buyback obligation provided by the lending company are marked with a shield icon on the Invest button.

Information source #2 – the Notes details

From the Note listing, investors can access further details for each listed loan by clicking on the ISIN. In this view, investors will find the following additional information:

  • Initial principal: The total principal amount of the Set of Notes at the time of issuance.
  • Remaining principal: The outstanding principal amount of the Set of Notes.
  • Listing date: The date on which the Set of Notes was listed on Mintos.
  • Expected maturity date: The expected maturity date of the Set of Notes is initially set to the maturity date of the longest underlying loan plus 10 days. If the schedule of an underlying loan is extended, the expected maturity date is extended by 180 days.
  • Initial maturity date: The initial maturity date of the Set of Notes is the date on which the longest underlying loan is initially scheduled to be fully repaid, plus 10 days.
  • Sink factor: The proportion of the Set of Notes that has not been amortized, calculated based on the weighted average sink factor of the underlying loans. Sink factor ranges from 0 (fully amortized) to 1 (fully unamortized).
  • Pending payments: Whether one or more of the underlying loans are more than 10 days pending.
  • Interest on pending payments: How much interest investors receive on payments that have been pending for more than 10 days.
  • Interest on late payments: Whether investors will receive interest on late payments.
  • Late loan exposure: The ratio of underlying loans that are late, calculated on the remaining principal.
  • Amortization method: How the loan amortizes.
  • Lending group: The legal entity that the lending company is a part of (if applicable).
  • Group guarantee: The legal entity providing a corporate guarantee securing the buyback obligation undertaken by the lending company (if applicable).
  • Prospectus: The base prospectus applicable to the Set of Notes. You can read more about this document below.
  • Final Terms: The Final Terms applicable to the Set of Notes. You can read more about this document below.
  • Investment breakdown: The Notes in the Set investors have invested in.

Information source #3 – the legal documents

Investments in Notes are governed by the following legal documents:

  • The Base Prospectus provides details about the risk factors, general information about the underlying loans, the lending company, Mintos, general transactional information, and more. Base Prospectuses have been prepared under requirements of the Prospectus Regulation and approved by the competent regulator, the FCMC.
  • The Final Terms document includes additional details that are not included in the base prospectus but are required by regulation, such as the ISIN provided by Nasdaq, the underlying loans, currency, denomination, price of each Note, issuance date, maturity, interest rate, payment date, and more.
  • The Key information document (KID) provides concise information about the main features of an investment product in a consumer-friendly format. This includes  the risk and reward profile and the costs associated with the product.
  • The announcement or supplement to the base prospectus, if any, provides changed, adjusted or otherwise updated information in the base prospectus. 

These documents are linked in the Notes details, and they are also centrally available on the Mintos website.

How premiums and discounts work

When an investor sells their investment on the Secondary Market, they can do so at par, or at a premium or discount.


At par (0% discount/premium) means that the price for an investment is the same as the outstanding principal. As a result, the expected yield for the investor is equal to the Note’s nominal interest rate. For example, an investment with an outstanding principal of €100 will be available to other investors to purchase for €100. 


At a premium means the investment will be available to other investors at a price that is higher than the outstanding principal. As a result, the expected yield for the investor is lower than the nominal interest rate. For example, if the outstanding principal is €100 and the premium is 5%, the investment will be available for €105. 


At a discount means the investment will be available to other investors at a price that is less than the outstanding principal. As a result, the expected yield for the investor is higher than the nominal interest rate. For example, if the outstanding value is €100 and the discount is 5%, the investment will be available for €95. 


You should not make an investment decision purely based on the discount or premium. You should consider your goals, the yield you aim to get from the investment, and potential risk. We’ll dive into evaluating risk and return in the next section.

How interest is divided between the buyer and the seller

When you invest in Notes on Mintos, you earn interest for the duration of your investment. If you decide to sell your Notes on the Secondary Market, you stop receiving interest once they are sold.


If you buy Notes on the Secondary Market, you start to earn interest from the date you bought the Notes. The interest accrued between the date the previous investor placed the Note on the Secondary Market and the date you bought it will be paid to the previous investor.

Did you know?

Research has shown that a goal-based investment approach can lead to better decision-making, as the focus is on achieving overall objectives rather than the performance of individual investments. You can read more about this in our lesson on the value of setting investment goals.

Evaluating risk and return

The risk and return of investing on the Secondary Market are generally in line with the risks and returns for the loans asset class, which you can learn more about in the respective lesson. In this section, we’ll focus on some additional caveats specific to the Secondary Market on Mintos.

Expected return

Yield to maturity (YTM) is one of the most important parameters for evaluating the long-term return on a debt-based investment such as Notes. It represents the current value of the future cash flows from the investment. It can help investors compare different investments and evaluate the expected annual rate of return, especially if the Notes are sold at a discount or premium.

YTM is expressed as an annual rate of return and is calculated under the following assumptions: 

  • The investment is held until maturity.
  • The investment is made at the listed rate (including any premiums or discounts).
  • Future payments will be made on time.
  • Late payments will be received the next day.

YTM is arguably more important than the nominal interest rate when evaluating investments on the Secondary Market, as it reflects the relationship between the price of a Note and its yield: 

  • YTM for a Note sold at par will be identical to the nominal interest rate.
  • YTM for a Note with a discount will be higher than the nominal interest rate.
  • YTM for a Note with a premium will be lower than the nominal interest rate.

It’s important to note that using YTM to predict returns has some limitations. Remember the assumptions under which YTM is calculated? There is no guarantee that these assumptions will become a reality. Future investment decisions and market events can impact the realized return. For example, you might decide to sell the Note early, a borrower might pay late or default on an underlying loan, or late payments might be even more delayed. In such cases, the realized return might be lower than the YTM calculated at the time of investment. YTM also does not account for taxes or fees.

Investment term

When choosing an investment, investors should also consider whether the remaining term matches their investment goals and time horizon. While in many cases you can exit an investment early by selling it, there’s no guarantee that you’ll be able to find a buyer. You might have to hold the investment until maturity or sell it at a discount, which could affect your realized return.


If the remaining term of an underlying loan is listed as “Late”, the loan has passed the last payment date and the borrower has failed to make one or more payments. Investing in such a Note carries elevated risk, and we advise investors to carefully review the Note details for more information before investing.

Repayment history and loan status

Investors can find additional information about an investment in the Note details. This includes information about the initial and remaining principal, listing and expected maturity dates, underlying loans, payment schedule, and more.

The status information provides details on whether the loan underlying a Set of Notes is current, in grace period, late, or defaulted.  

  • Current: The borrower has made all due payments so far.
  • Grace period: The borrower is late with a payment on the underlying loan, but is still within a period in which a penalty fee (or other action) is waived according to the loan agreement. The exact number of days for a grace period depends on the lending company.
  • Late: The borrower is behind schedule. There is still a reasonable expectation that the borrower will be able to make the due payments. The loan might also be covered by a buyback obligation provided by the lending company. Nevertheless, investing in a late loan carries elevated risk. Realized returns might be lower than the calculated YTM if there are further delays.
  • Defaulted: The loan agreement has been canceled and the entire balance is due and payable. Investing in a defaulted loan carries a high risk. The return is generally unpredictable and depends on the lending company’s ability to collect the outstanding debt from the borrower. 

The payment schedule lists all past and planned payments on the underlying loans, including details on the principal and interest paid as well as the payment date. Late payments are also noted. Investors can use this information to better understand the borrowers’ payment history and the expected future cash flows from the Note.

Mintos Risk Score

The Mintos Risk Score assesses the risk level of a particular investment on Mintos1. It’s calculated from 4 subscores that provide more granular information about specific aspects which we consider important for the performance of Notes investments:

  • Loan portfolio performance assesses the health and performance of the loan book relative to the cost of serving the portfolio. 
  • Loan servicer efficiency assesses the capabilities of the loan servicer when it comes to collection of borrowers’ payments.
  • Buyback strength assesses the buyback obligor’s ability to fulfill contractual obligations, meet liquidity needs, and capital sufficiency.
  • Cooperation structure assesses the legal setup between the lending company and Mintos.

Investors can use the Mintos Risk Score and subscores to make informed decisions about the relative risk of an investment they are considering. The Mintos Risk Score and subscores range on a scale from 10 (low risk) to 1 (high risk).


You can find a detailed explanation of the Mintos Risk Score on our website.

Automated investments on the Secondary Market

You can set up automated investments on the Secondary Market by creating a custom automated strategy. These strategies invest on your behalf according to the investment criteria you selected. While this means giving up some control, as you won’t review each investment individually, you can set up your strategy to invest according to your preferences for the investment criteria listed above. And by automating, you will save a lot of time and keep your money working consistently. You can read more about this topic in our lesson on automating loan investments with a custom automated strategy.

  1.  Under no circumstances should the Mintos Risk Score be treated and relied upon as a credit rating in accordance with the methodology and provisions defined by the Regulation (EC) No 1060/2009 on credit rating agencies. The Mintos Risk Score is not investment advice and Mintos cannot be held liable for any losses which may result from basing investment decisions on information and/or analytical materials provided on this website.

Did you find this article helpful?