There is currently an issue with the bond rating mechanism in the game.

[xuxin1458]

The current bond rating system is entirely based on profits. If a company with assets worth hundreds of billions incurs a slight loss, its rating drops to C or below, while a company with assets worth only millions can immediately rise to an A rating as long as it is slightly profitable. I believe this is unreasonable. In reality, ratings are indeed related to profits, but they are even more closely tied to assets. You cannot expect a company with hundreds of billions in assets to have a lower rating than a company with only millions in assets, unless there is a significant difference in their profits. I think an asset coefficient should be introduced, combined with the existing profit coefficient, to determine the overall rating.
This issue can easily lead to arbitrage. For example, you could establish a subsidiary, which typically starts with a CC rating. After the subsidiary issues bonds, if it has no source of profit and still needs to pay interest, its rating will quickly drop to D, and the bond price will plunge by 40%. You can then directly purchase these bonds and net a 40% profit in just a few days. This is highly unrealistic.
Additionally, the current loan and bond limits in the game rely entirely on profits and total assets, which I find unrealistic. In reality, loans typically require collateral, and purely credit-based loans usually have lower limits. I believe 20% of the loan limit could be allocated to credit-based loans, while the remaining 80% should require land as collateral, which better reflects real-world practices. If you need a loan, you must have land as collateral, and this collateral cannot be sold unless the loan is fully repaid. Of course, this mechanism is quite complex, so I think it could be considered as part of a future DLC (for example, allowing company stocks to also serve as collateral).

[David]

The current bond rating system is entirely based on profits. If a company with assets worth hundreds of billions incurs a slight loss

How small is the loss in the case you stated above? Could you provide me with a save game so that I can look into it?

[xuxin1458]

The current bond rating system is entirely based on profits. If a company with assets worth hundreds of billions incurs a slight loss

How small is the loss in the case you stated above? Could you provide me with a save game so that I can look into it?

I did misspeak somewhat regarding high-asset companies. Their ratings do not quickly drop to a C rating or lower—significant losses are required for that to happen. However, for low-asset companies (such as those with assets under 50 million), even slight fluctuations in profits can lead to substantial changes in ratings. For example, if I initially realize a modest profit, the rating could immediately jump to an A, allowing the company to issue bonds. Then, if I reduce profits and incur losses, the rating could drop to a D, enabling me to buy back the bonds and immediately earn a four- to five-fold difference in price.

[David]

How do you suggest this to be changed? It seems to me that the game is just following the financial principles in the real world.

[xuxin1458]

How do you suggest this to be changed? It seems to me that the game is just following the financial principles in the real world.

I think an asset coefficient should be introduced, combined with the existing profit coefficient, to determine the overall rating.

[David]

The dev team will release a new update in the coming week improving the bond rating mechanism.

[David]

The issue has been fixed. Please download the new patch v12.0.03 from https://www.capitalism2.com/forum/viewtopic.php?t=10546

[vitorgamer58]

The issue has been fixed. Please download the new patch v12.0.03 from https://www.capitalism2.com/forum/viewtopic.php?t=10546

Hi David, could you give more details on how the ratings for the securities are? It's also interesting to consider that not all profit variation is a cash flow effect. For example: A company that made $50 million in profit from product sales, but lost $60 million due to changes in stock value. The final profit is a negative $10 million, but the cash generation is $50 million, meaning it's a healthy company for paying interest. Perhaps it would be interesting to allow Mod developers to alter how the rating is calculated using some equation, so anyone could develop a mod that uses, for example: Assets, cash on hand, profit, or a cash on hand - debt formula (which would be an approximation of Benjamin Graham's Net Working Capital), or even use the percentage of debt to assets for the rating, because even a company that is losing a lot of money may have a very large asset that can be sold to pay off debt (such as stocks or bank deposits). This shows that not all assets are the same; real estate is illiquid and takes time to sell, stocks can be sold immediately, and cash is liquidity. Even this could be considered in a rating coefficient, in a behavior that a mod developer could create.