When attempting to sell loans on the Mintos Secondary Market, you may encounter a negative Yield to Maturity (YTM) error. This occurs when the expected return for potential buyers is calculated as negative, making the loan unattractive. Below are the most common reasons for this issue and how to resolve it.
Possible causes of a negative YTM error:
- Selling at a Premium
If you are selling a loan above its nominal value (at a premium) and the remaining interest is too low, the buyer’s YTM calculation may turn negative. This happens because the buyer pays more than the loan's remaining value but receives minimal or no additional interest. - Low Remaining Interest Payments
If the borrower has already repaid most of the interest and only a small principal remains, selling at a premium can result in a negative YTM for the buyer.
Example: A loan has €10 in outstanding principal but only €0.05 in future interest payments. If you list it for €11, the buyer effectively loses money, leading to a negative YTM. - Late Loans or Loans in the Grace Period
Loans that are late or in a grace period may not generate future interest payments until they are repaid. If you try to sell these loans at a high premium, the expected return for buyers can turn negative.
How to Fix a Negative YTM Error
If you encounter this error, consider the following solutions:
- Adjust your premium/discount – If selling at a premium, try lowering it or offering a small discount to make the loan more attractive to buyers.
- Check the remaining interest vs. principal – If only a small amount of interest is left to be paid, selling at a premium may not be possible.
- Sell loans with longer remaining terms – Short-term loans with little remaining interest often result in a negative YTM. If possible, consider selling loans with more time left until maturity.
- Avoid selling Late loans – Loans that are late or in a grace period are generally less attractive to buyers unless offered at a significant discount.
By following these steps, you can increase the chances of successfully selling your loans on the Mintos Secondary Market without encountering a negative YTM error. If you continue to experience issues, please contact our support team for further assistance.