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FastLearner
Fury Holdings
Brutally Clever Empire
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Posted - 2008.02.19 09:36:00 -
[1]
I think some people have missed the whole point of what the OP is doing - i.e. those bidding less than 1m per share. He's not trying to give away bonds as cheaply as possible, he's trying to raise as much ISK as he can.
There's one HUGE point which needs to be clarified for this to work. The OP says that the bonds will be repaid "no later than 4 months from the date of issue". That's NOT the same as the bonds having a fixed life of 4 months. As it stands someone who offered 1.1m per bond could find themself being bought out for 1.05m per bond after 2 weeks. Unless the life of the bonds has a cast-iron minimum (rather than maximum) set there's no way anyone should be bidding over the bare minimum.
I agree with the principal of auctioning off bonds - it reduces the cost of capital and it gives everyone a chance to obtain bonds, rather than just whoever posts first. But please define the life of the bond properly so that people actually know what they're bidding for.
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FastLearner
Fury Holdings
Brutally Clever Empire
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Posted - 2008.02.19 14:21:00 -
[2]
 Originally by: Ahn Riane
Edited by: Ahn Riane on 19/02/2008 12:53:04
Originally by: FastLearner
I think some people have missed the whole point of what the OP is doing - i.e. those bidding less than 1m per share.
He's not trying to give away bonds as cheaply as possible, he's trying to raise as much ISK as he can.
Actualy, he is trying to get exactly 1.5b ISK, and he wants to minimise the interest he has to pay for it.
I'm not convinced that's the case. I read it as he's going to sell exactly 1500 bonds whatever price they sell for. Look at his (confusing) example in the second post - the first 3 bidders have committed 1.5 billion but the fourth one still gets to count. I say confusing - as in his example some people appear to be buying partial bonds (500m doesn't buy an exact number of bonds at the listed bids). Bids should be of the format "X bonds at Y each" - makes it easier to work out the status and prevents bids which would amount to fractional bonds.
It looks like it was done in a rush - as there's pretty silly errors like that in it. But the principle of auctioning off bonds/shares is a sound one - and is likely the route I'd follow if Fury Bank needed to raise ISK pretty quickly (e.g. to finance a loan).
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FastLearner
Fury Holdings
Brutally Clever Empire
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Posted - 2008.02.20 19:29:00 -
[3]
Edited by: FastLearner on 20/02/2008 19:32:21
Not sure which of you is correct.
OP says "Coupon (Interest): 10% per month (paid at 5% every 2 weeks)."
Which is ambiguous - as it could be 5% per 2 weeks or it could be 10% per month.
What % you get as a return is obviously significantly different depending on which you believe is the case. 5% per 2 weeks is about 10.89% per month (assuming an average month length of 30.5 days).
EDIT: Ambo - your calculation is sort of wrong. Although you're technically correct about the return per month, you're not factoring in that you lose 50m after 4 months when the bond closes.
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