Following the successful issuance of a EUR 50 million bond, secured car loan provider Mogo will refinance its existing funding facilities. Among others, this will include loans funded by investors on Mintos.
Starting from July 13, 2018, Mogo will partially repurchase loans from investors on Mintos using their call option as stipulated in the assignment agreement. During July, Mogo plans to gradually repurchase in total up to EUR 16 million net of loans issued to borrowers in Bulgaria, Estonia, Latvia, Lithuania, Poland, and Romania and funded through Mintos. More specifically, Mogo intends to repurchase approximately:
EUR 1.1 million of loans originated in Bulgaria;
EUR 4.1 million of loans originated in Estonia;
EUR 5.1 million of loans originated in Latvia;
EUR 4.0 million of loans originated in Lithuania;
EUR 0.5 million of loans originated in Poland;
EUR 1.1 million of loans originated in Romania.
Mogo will repurchase both performing and non-performing loans from investors. The composition of loans that will be repurchased will reflect the composition of all loans originated by Mogo, with the same loan term and interest rate parameters in the respective country, and currently outstanding on Mintos.
On Mintos, the performance and quality of loans, along with the financial stability and size of the loan originator, are some of the aspects that determine the interest rate at which loans are offered to investors on the marketplace. Following the issuance of the bond, the Mogo group has further diversified their funding sources and brought down the weighted average cost of financing, thus strengthening its financial position.
As a result, Mogo will reduce the interest rate at which it sells loans to investors on the marketplace. The net annual return rate for Mogo loans will be up to 11%. This reflects the lower risk profile of Mogo as a loan originator and loan servicer, whilst still providing ample opportunities for investors to earn great risk-adjusted returns.
Mintos provides a flexible and scalable funding model and Mogo will continue funding a significant part of their loan volume through Mintos. The company will continue to offer loans from both the current countries available on the marketplace and new geographies for investment. In addition to placing new loans on Mintos, Mogo plans to repurchase a volume of the loans originated in the countries mentioned above, and currently outstanding on the marketplace, and replace them at lower rates.
Mogo now operates in Albania, Belarus, Bulgaria, Estonia, Georgia, Latvia, Lithuania, Moldova, Poland and Romania. As of June 30, 2018, total loans outstanding on Mintos originated by Mogo amounted to EUR 85 million, while Mogo group’s total net loan portfolio amounted to EUR 120 million.
NB! Please note, that if you are purchasing Mogo originated loans on the secondary market on Mintos, they may be repurchased soon and you could be at risk of losing the premium paid.