4 ms·
Just because you believe the government won't let the airlines go away doesn't ensure that the bonds are safe. Sometimes keeping a company in business involves
by bobbyi_settv 6y ago
Just because you believe the government won't let the airlines go away doesn't ensure that the bonds are safe. Sometimes keeping a company in business involves a restructuring such that those bonds won't pay out as you're expecting.
- cm2187 6y agoLike United Airlines.
- quietbritishjim 6y agoGenuine question: if a company didn't pay out on its bond, that's a default; how can it default without going bankrupt?
- empath75 6y agoGoing bankrupt means lenders and shareholders are wiped out but the company can be restructured and continue operating.
- peteretep 6y agoI believe what you’re missing here is a “Chapter 11 Bankruptcy”, as opposed to a “Chapter 7 Bankruptcy”. Chapter 11 means the business keeps running, but the owners lose their money, Chapter 7 is what most of the world considers to be a bankruptcy / going bust / liquidation. Uncle Sam probably doesn’t care if Delta does a Chapter 11, as long as the planes keep flying.
- kube-system 6y agoI guarantee that Uncle Sam doesn't care if Delta files chapter 11. https://money.cnn.com/2005/09/14/news/fortune500/delta/ https://money.cnn.com/2005/09/14/news/fortune500/delta/
- kart23 6y agoholy shit. And there was a guy here who bought delta bonds, saying he would make an easy 7% by the end of the year.
- chii 6y agosometimes bond holders are given the option to convert the debt into equity (at probably pennies to the dollar, which is a steep discount and therefore, a good deal) - that's what restructuring means.