My name is Bond, Corporate Bond.
Discussion
As an arithmetic exercise I looked back at the Aston Martin corporate bond issues.
I am sure you know, but corporate bonds are issued by companies, with the promise of a fixed rate of interest and a fixed date for repayment. The companies use the money raised for business purposes.
I won't list the full details, but thought you might be interested in the sequence of total outstanding debt amounts.
Jun 2011 ..... £304m
Mar 2014 ..... £504 m
Early redemption in 2017
Apr 2017 ..... $630m
Apr 2019 ..... $820m
Oct 2019 ..... $970m
Jun 2020 .... $1038m
Early redemption in 2020
Nov 2020 ..... $1421m
Mar 2021 ...... $1519m
Part early redemption in Oct 2022
Oct 2022 ...... $1366m
Inflation obviously complicates the comparison, as do the changing £/$ exchange rates.
Some of the bonds use what is known as Payment in Kind (PIK).
A fluffy phrase meaning, by agreeing to pay extra, no interest payments at all are made, until the end date (maturity) of the bond.
Each issue being refinanced by another, ever bigger issue.
Imagine buying our houses in this way !
The big risk of course, is not being able to find any lenders, when the time comes to refinance.
Jon39 said:
Each issue being refinanced by another, ever bigger issue.
Imagine buying our houses in this way !
The difference is at the end of the day the mortgage lender can sell the property it has a legal charge on....what security do AML bondholders have ?
pschlute said:
Jon39 said:
Each issue being refinanced by another, ever bigger issue.
Imagine buying our houses in this way !
Its an interest only mortgage.... topped up with another loan to cover the interest. Been prevalent for years.
The difference is at the end of the day the mortgage lender can sell the property it has a legal charge on....what security do AML bondholders have ?
Sounds quite racey for the domestic market.
Maybe Northern Rock doing special deals in their heyday, for customers who cannot afford any capital repayments or interest repayments.
Doubt a local Nationwide would be terribly keen.
A very specialist product.
Yes, the AML corporate bonds do involve security, indicated by 'Secured' in the titles.
Cannot remember what AML assets are involved, but possibly it might include the Gaydon factory building.
Having been fascinated by watching videos inside the most modern car factories (hugely robotic), the AML production equipment might not have much value as security these days.
Have you seen the YouTube video, about the Mercedes Factory 56 ?
Jon39 said:
Sounds quite racey for the domestic market.
Maybe Northern Rock doing special deals in their heyday, for customers who cannot afford any capital repayments or interest repayments.
Doubt a local Nationwide would be terribly keen.
A very specialist product.
pschlute said:
Let's not forget what triggered the financial crash of 2007/08. Mortgage lending in the US. The proliferation of "Liar Loans"
Exactly, hence my mention of Northern Rock who suddenly found, that nobody was willing to refinance the debt they had to repay.
The CEO spoke live on the BBC Radio 4 Today programme. It was a surprise that he should announce such a thing to a radio audience, but it made a memorable radio moment.
We have seen on so many occasions, how excessive debt can lead to trouble.
Considering AML's current lack of profitability, do you think they might have reached their limit with debt?
At least the latest fund raising involved equity, so no ongoing servicing costs and neither are there any repayment obligations.
They seem to have the magic touch being able to raise ever more equity funds, so perhaps that is the way out of potential trouble.
Adjusting to eliminate the 1 for 20 capitalisation issue;
Just 4 years ago at the IPO, the number of shares in issue was ................................................ 228,002,890
whereas the comparable number of shares now would be ..................................................... 13,975,141,500
The 'cake' has been cut into so many more slices, with the consequential effect on value..
The shareholders are wonderful with their continual willingness to contribute money.
There are plusses when we look for them.
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