Issuing and trading corporate bonds

[David]

Here is a preview of the new features for issuing and trading corporate bonds:
https://www.capitalismlab.com/banking_d ... ate-bonds/

[femoral]

Awesome David, I will definitely support this DLC too.

Just to keep your inspiration in business, I recommend you this course and this book:

https://www.thegreatcourses.com/courses ... ccess.html
https://www.amazon.com/Personal-MBA-Mas ... 1591845572


Thanks!

[megapolis]

Hi David,

I have a question. As far as I remember, currently bond interest is paid by Cities monthly. As a result cities only default on principal amounts.
Is it done to reflect this, so that the cities in trouble will be able to default long before principal amount is due to repayment?
Will cities default on all bonds simultaneously or only on the oldest bond as they do now?

[David]

Hi David,

I have a question. As far as I remember, currently bond interest is paid by Cities monthly. As a result cities only default on principal amounts.
Is it done to reflect this, so that the cities in trouble will be able to default long before principal amount is due to repayment?
Will cities default on all bonds simultaneously or only on the oldest bond as they do now?

Only on the bond with the nearest maturity date.

[Arcnor]

I note that it says bondholders of a company that goes bankrupt loose all value. This is not very realistic. If anything it's the bondholders who stand to actually get at least something from a bankruptcy. Equity investors generally lose everything. Its common practice to buy bonds in distressed companies for the value they might bring in a liquidation.

Any thought to having the game process bankruptcies as follows:

- Immediate liquidation of all company remaining assets (firms, land, inventory, and shares)

From the proceeds from the liquidation, pay off any short term credit to the bank (bank revolvers generally are always senior to bondholders) and then any remaining funds are split up between bondholders based on % held.

Just my two cents.

[standardplayer]

What about a Restructuring Bankruptcy?

If a Bondholder Owns say ~50% of Companies Outstanding Bonds they could have the option to convert it to equity and take control of business then they would inject additional cash to continue operations.

[standardplayer]

Could there be National Government Bonds as well that would represent the Risk Free Rate of Return that is key for pricing other investments. In the real world investments are often priced at a premium relative to the interest rate on US Treasury Bonds.

The total amount of National Government Bonds available would be based on a Percentage of the Countries GDP.

[beamthegreat]

I note that it says bondholders of a company that goes bankrupt loose all value. This is not very realistic. If anything it's the bondholders who stand to actually get at least something from a bankruptcy. Equity investors generally lose everything. Its common practice to buy bonds in distressed companies for the value they might bring in a liquidation.

Any thought to having the game process bankruptcies as follows:

- Immediate liquidation of all company remaining assets (firms, land, inventory, and shares)

From the proceeds from the liquidation, pay off any short term credit to the bank (bank revolvers generally are always senior to bondholders) and then any remaining funds are split up between bondholders based on % held.

Just my two cents.

I fully support this. In the current version of the game, banks are already paid first when a company goes bankrupt and the shareholders get whatever is left. If bonds are added they should have priority over shareholders, it would unrealistic for shareholders to receive the remaining amount and for bondholders to go broke.

[David]

The dev team will implement this.