What are the benefits of rolling over?

To offer added insight on rollovers, a rollover occurs when an underwriter or borrower elects to refinance a note early (before maturity) or at maturity. Refinancing a note early allows the borrower to change the terms of their debt line (new maturity, new rate, larger or smaller note size, etc.). In order for a rollover to materialize, the new note must be sufficiently subscribed by investors.

By choosing to roll over, you have the potential to receive continued returns on all your principal outstanding from a borrower that you are acquainted with and, because of that, you already have a better knowledge of potential risks and investment rewards that you can expect. We know that investors spend time exploring and investigating borrowers - so investors often cite a prior track record with a particular borrower as a key factor in their continued investment.

You also have the option to increase the principal invested by rolling over, which gives you more flexibility in deploying based on your financial goals and market changes - and an opportunity for cases in the rollover to have a higher coupon rate compared to the previous one, giving you higher returns.

On the other hand, if an investor decides not to roll over, that may result in a full principal return, or it may result in amortized payments, which lowers your amount of principal outstanding in the note, making the effective return on outstanding principal potentially smaller as amortization continues and increasing the potential for cash drag in your portfolio (if the returned money is left not invested).

If you need further assistance, feel free to reach out to us via chat or at support@percent.com.