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Does the value of a company matter for their bonds? As I understand it, Twitter is breaking even given all expenses, which means that they should not have prob
by tomjen3 2y ago
Does the value of a company matter for their bonds?
As I understand it, Twitter is breaking even given all expenses, which means that they should not have problems paying back their debt. In which case, the investment seems solid. If we were talking stocks, I would understand it.
- ben_w 2y ago> As I understand it, Twitter is breaking even given all expenses What I've heard is the opposite, that the cost of servicing interest on the loans they now have exceeds 100% of their total revenue. (Not profit, revenue: even if they cut absolutely every other cost to zero they'd still be losing money).
- jacobjjacob 2y agoIf they aren’t growing, and barely breaking even, the chances of going into the red are not low. Idk if the bonds have a rating but I don’t think X would have a AAA rating right now? If it’s really worth 95%, it’s only held up by the political situation and investors’ general Elon bubble.
- mminer237 2y agoBonds do have a rating, but Microsoft is the only AAA corporate bond I know of off the top of my head. Even Amazon is AA, while I would guess Twitter more like AMC at CCC- if it were rated.
- wbl 2y agoDebt is short a put. The shareholders can walk away from a default and you are stuck with whatever the company is worth. So the more enterprise value vs the debt, the safer.