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The class B bonds paid roughly 11% over LIBOR, so about 40% over three years, against the risk of a viral outbreak for five different families, defined as At le
by HillRat 1y ago
The class B bonds paid roughly 11% over LIBOR, so about 40% over three years, against the risk of a viral outbreak for five different families, defined as At least two countries experiencing at least 250 fatal cases increasing over twelve weeks, so the trigger did not have to be as globally-significant as COVID-19 turned out to be. That’s a pretty aggressive coupon, but the chance of a regional outbreak was also pretty high.
- danielfoster 1y agoMakes sense now, thank you! I feel like the author should have mentioned this.
- panguma 1y agoWell, she did, in the book.
- dmurray 1y agoBased on that description it would have been triggered by COVID-19, swine flu in 2009, and I think just missed out (depending on the fine print) on SARS in 2002. That's two or three in 18 years, so losing your money once every eight years is not far off the recent performance of this kind of bond.