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SpaceX bond worth 10% less than issue price – heading for junk bond status

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Re: SpaceX bond worth 10% less than issue price – heading for junk bond status

#431

Post by koolba »

el_nahual wrote: post #377
toast0 wrote: post #365

Earlier quoted context omitted.

> 2. Those bonds are now trading for less than their face value. That means that if you buy one of those bonds on the secondary market, you will get a return (yield) of 7.387% That's your return if you buy one of those bonds and the bond is paid on schedule. Presumably the market consensus is there's some risk that payment may arrive late or not at all since the yield to maturity has increased since issuance and not…

I mean, that's what the yield is . The spread between what the bond pays and the Risk-Free Rate (Treasury) tells you what the market thinks the risk of default is. For a spread of 300 basis points that's still a very low probability, probably under 5%.

Even in the case of a default it’s not a zero payoff. Bond holders get first dibs of unsecured assets at liquidation.

Re: SpaceX bond worth 10% less than issue price – heading for junk bond status

#432

Post by JumpCrisscross »

yobutdude wrote: post #399
JumpCrisscross wrote: post #393

Earlier quoted context omitted.

> worst about the SpaceX IPO is Nasdaq changing their inclusion rules Nasdaq 100 has always been marketed as a tech-forward index. It would be a bit ridiculous if they didn’t include the most value tech companies on the market. There was a potential scandal at S&P. But it didn’t happen. My personal guess is a lot of finance influencers latched onto this story. When it didn’t pan out they tried to maintain credibility…

They changed the rules for one person. You are the biggest simp for the rich. They pay you to post here in their defense? Discourse on this site is no better than Twitter or Reddit, just another flavor of stupid.

> They changed the rules for one person

The timing isn’t great. But this was being discussed for a while. If it were only SpaceX, I’m doubtful the rules would have changed. But a tech index not including SpaceX, OpenAI, Anthropic and SK Hynix is a bit silly. And in the end, on index inclusion, the stock still fell.

> simp…Twitter or Reddit

Mm hmm.

Re: SpaceX bond worth 10% less than issue price – heading for junk bond status

#433

Post by Capricorn2481 »

artemonster wrote: post #296
dgritsko wrote: post #24

Earlier quoted context omitted.

You dropped your "/s".

This is not reddit, people actually read and understand sarcasm (most of the time)

HN is closer to Reddit than you think, there's just a little more ceremony to it.

Re: SpaceX bond worth 10% less than issue price – heading for junk bond status

#434

Post by JumpCrisscross »

alistairSH wrote: post #402
HPMOR wrote: post #364

Earlier quoted context omitted.

Yeah, this is correct. There are so many large multi-trillion dollar companies coming to IPO, which if your are passive index holder and you are trying to track the market it is correct for these companies to be included. And besides SPY has chosen not to fast track where QQQ has. It is a free market, and folks are free to NOT buy QQQ. So I'm not sure why this is a point of debate.

"People" in this instance aren't always informed buyers. Sometimes they're buying an index fund because they don't have the time to research individual stocks and sometimes it's their pension investing. The normal seasoning period is there for a reason. There is a massive downside to premature inclusion of a stock that is initially overvalued and then settles to a reasonable/sustainable value.

> Sometimes they're buying an index fund because they don't have the time to research individual stocks and sometimes it's their pension investing

Then they should buy a broad-market fund. The kinds in which new issues are a tiny fraction or, if it’s following something like the S&P 500, not included at all. Following the Nasdaq 100 and then complaining it has too many risky tech plays is a bit silly.

Re: SpaceX bond worth 10% less than issue price – heading for junk bond status

#435

Post by infecto »

runarberg wrote: post #105
infecto wrote: post #85

Earlier quoted context omitted.

Is this really the worst thing? People keep bringing this up but it’s the Nasdaq 100. It would be shocking if we were talking about the SP500.

So you are saying it could have been worse, and therefor it is not that bad. I feel like this may be a logical fallacy. It is like saying that the worst thing about twin earthquakes in Venezuela was not the fact that there were two of them, because there could have been three.

Defend your position instead of comparing to earthquakes. The Nasdaq 100 is already quirky in that it’s the largest 100 non-financial companies listed on Nasdaq. So it’s a large-cap growth/tech play or for Nasdaq a showcase piece. I don’t think it’s great they remove the 3 month criteria but also knowing the specific slice of potentially unprofitable companies it highlights does not make it as concerning as the SP500 drastically changing their rules to include.

Re: SpaceX bond worth 10% less than issue price – heading for junk bond status

#436

Post by JumpCrisscross »

tavavex wrote: post #137
lucd wrote: post #41

The worst about the SpaceX IPO is Nasdaq changing their inclusion rules for the Nasdaq 100. The index fast-tracked SpaceX stock for inclusion 15 days after the IPO, instead of the normal three-month seasoning period. They also changed its 10% minimum float rule to a 3x weighting boost for low-float stockss. So many people will unwillingly and prematurely invest into SpaceX, before it has any chance to discover its re…

So, the inclusion rules are basically "these are the hard limits that specify which stocks are eligible, unless someone really big and lucrative comes along, in which case it's whatever and we'll just adjust the rules to make them eligible"?

> the inclusion rules are basically "these are the hard limits

The inclusion rules for indices change every couple of years. That’s why there is an index provider versus a mathematical formula. (There are also formulaic indices. They aren’t very popular.)

Re: SpaceX bond worth 10% less than issue price – heading for junk bond status

#437

Post by JumpCrisscross »

jordanb wrote: post #430
tavavex wrote: post #309

Earlier quoted context omitted.

What do you mean? I was under the impression that including SPCX has been massively beneficial for Nasdaq. It creates lots of trading volume and sends a quiet signal to other massive tech companies looking to IPO to come to them, rules be damned. So they're definitely extremely lucrative for Nasdaq.

Having the stock traded on their board is good for them. They also maintain an index. Elon made inclusion in the index a prerequisite for trading the stock on the board.

> Elon made inclusion in the index a prerequisite for trading the stock on the board

Source?

He may have claimed this. But he has no power to. Once a stock is publicly listed, every exchange can trade it. Where Musk had influence was on to whom he paid his listing fee.

Re: SpaceX bond worth 10% less than issue price – heading for junk bond status

#439

Post by segmondy »

Heading for junk? It's absolutely junk and trash. Every retail investor that I know that bought SPCX, did so to make a quick buck. It's even worse than crypto, at least some people believe crypto has value and will take over or replace fiat currency. No one that I know who bought in SPCX did so believes the space data center story or going to mars. There's certainly value in launching things into space, but none believed the valuation with the profit, but the figured Elon has the midas touch and they could cash out before the music stopped.

Re: SpaceX bond worth 10% less than issue price – heading for junk bond status

#440

Post by infecto »

FireBeyond wrote: post #316
quickthrowman wrote: post #114

Earlier quoted context omitted.

The S&P committee never said they would. Space X asked and the committee said no. They should not have asked.

No, but they did hold research sessions and they did draft the policy and the rules and all the updates and have them go through legal... they were planning to, until they saw public sentiment, or other influence. It'd be misleading to claim it was never a consideration.

Considering yes but unclear how much of that is doing valid DD or a real push internally to want inclusion.
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