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skuta · 12-05-2020, 21:37

Bonds are financial debt instruments companies use like an interest-only loan. When these bonds "mature" in say 7-10 years. The Bond must be repaid in full. Normally new Bonds are created to pay off these mature Bonds, essentially refinancing. Rolling over company debt.The Bond Market is going to be short of the investors required to buy these new Bonds.

So at the moment Bond issuers under lockdown are likely to default because of low or no revenues. Companies won't be able to pay interest or in full when the Bond matures. Bond holders will suffer big losses as a result of this. The big problem here that nobody is talking about is the chain reaction across the entire financial system. Bond issuer (like an airline nobody is interested in because paying customers are not travelling) ---> Bond holder with big losses (like a hedge fund) ---> Bank (Your Bank going under because of huge loans to Bond holders going bad)

Are we facing a bigger cataclysmic event than the 2008 financial meltdown? What's being done about this? Don't mention the govt. loans to business because the same problem applies to these loans as well. If you're closed and can't afford to trade, how on earth can you pay back a loan with no customers or revenues? This is the way it looks to me. I might be just missing something or misinterpreting the whole deal. Any thoughts?

12-05-2020, 21:37	#1
skuta Member Join Date: Jan 2012 Location: in my head Posts: 62 Liked: 14 times Rep Power: 0	Bond Market Bonds are financial debt instruments companies use like an interest-only loan. When these bonds "mature" in say 7-10 years. The Bond must be repaid in full. Normally new Bonds are created to pay off these mature Bonds, essentially refinancing. Rolling over company debt.The Bond Market is going to be short of the investors required to buy these new Bonds. So at the moment Bond issuers under lockdown are likely to default because of low or no revenues. Companies won't be able to pay interest or in full when the Bond matures. Bond holders will suffer big losses as a result of this. The big problem here that nobody is talking about is the chain reaction across the entire financial system. Bond issuer (like an airline nobody is interested in because paying customers are not travelling) ---> Bond holder with big losses (like a hedge fund) ---> Bank (Your Bank going under because of huge loans to Bond holders going bad) Are we facing a bigger cataclysmic event than the 2008 financial meltdown? What's being done about this? Don't mention the govt. loans to business because the same problem applies to these loans as well. If you're closed and can't afford to trade, how on earth can you pay back a loan with no customers or revenues? This is the way it looks to me. I might be just missing something or misinterpreting the whole deal. Any thoughts?