EstateGuru loans now rated by Moody’s
All EstateGuru’s new loan projects will now be rated by international risk analysis agency, Moody’s.
New projects offered on the European peer-to-peer lending platform will be rated to help investors better assess the value and risk level of the projects.
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“It is very important for us to ensure that crowdfunding investors have access to the best possible information,” said Mihkel Stamm, chief executive of EstateGuru.
“Moody’s rating provides another important perspective to assess the reliability of each project and make informed investment decisions.”
The Moody’s rating on each project is displayed for all registered users of the investment platform alongside each individual project.
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The rating methodology takes into account many factors, including project location, value, cash flow, collateral type, loan terms (including term and interest rate) and other relevant credit inputs and data points.
“The rating of our projects spans from Aaa to B1, reflecting a broad spectrum of risk profiles, with the probability of default capped at a maximum of five per cent based on the Moody’s risk assessment model,” Stamm said. “We will not offer new projects with higher risk indicators than described on our platform starting from the end of July.”
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EstateGuru has been strengthening its underwriting processes after a challenging 2022, in which it cut its international workforce by more than a third and reduced its external development costs to bolster its balance sheet.
Last month, it outlined its aim to reduce its default rate to 20 per cent this year, and to under 10 per cent in 2024.
“We cannot discount the impact of macroeconomic factors on investors and investing in general, but it’s also vital that we look in the mirror and identify the areas in which we as a company need to improve,” Stamm said at the time. “In this regard, decreasing the default level is obviously a priority.”