What are Ginko Bonds worth?

I was asked by a resident on another thread how much Ginko Bonds are worth but unfortunately the thread got closed before I was able to answer.

Anyway, here's my response.

So as to put a value to the bonds today, we'll need to look into the future a bit, let's say 3-4 months down the road.

(Why 3-4 months? Because by then we'll know whether Linden Labs will have intervened in some form or whether it'll be business as usual).

Scenario A:
Business as usual. Depositors are pleased with the bonds they got and Linden Labs felt no reason to intervene. Ginko will be financially healthy having securitised their debt at an interest rate they can afford to pay. (Seeing as Ginko only has one shot at getting this right, there's no reason to believe they can't pay 12% per annum on the bonds).
What value do the bonds have then? We'll need to make an assumption. As the bonds are perpetual bonds and as they payout interest every 90 days they're more comparable to 3 month term deposits. One Bank is paying 15.95% on one week deposits so 90 day deposits will be higher, plus some kind of risk premium. However, unlike term deposits these bonds will be priced by the market and not a management team. Seeing as we can expect fresh capital to come into the markets in the coming months (Hope Capital planned RL advertising campaign) and that any new investors will be unfamiliar with the Ginko saga they might find a yield of say 25% attractive. (We have to make some kind of assumption here otherwise it's impossible to evaluate the bonds at all).
Seeing as the bonds pay 0.12 L per year they'd be trading at 0.48L.

Scenario B:
Depositors are in uproar, lawsuits are pending and Linden Labs has intervened. Seeing as it's most likely that any seized SL assets controlled by Ginko avatars will be distributed back to depositors on the day the debt was converted, bondholders won't receive a penny. In this case, the bonds are then worthless.

Scenario C:
Following on from Scenario A and having bought up all cheap bonds on the market, Ginko might redeem the handful of bonds left on the market at face value: 1L. Would they do this? Unlikely, because the bonds would have to be de-listed and from a marketing point of view and to maintain brand awareness it's good to keep them listed. So for purposes of our model we can dismiss this scenario.


So now we can put our model together assuming probabilities on each scenario, from today's point of view.

Let's be neutral and for demonstration purposes, let's say the chances of scenario A or B occurring is 50%

We then get this result:

0.48 * 50% + 0.0 * 50% = 0.24

which incidentally is exactly what the market is saying at the moment: 0.24

(okay so I fudged the figures, but you get the idea ).

Who really cares?

Even though there is a huge opportunity to make a lot of profit from them.

I would not buy them as i have no respect for Mr Portocarrero.

I don't know my friend ginko balance was transfered to bonds without her consent now 95k in bonds is worth 15k in lindens. She lost over 350 usd trusting Ginko. The anual percent is supposively like 15 percent but truthfully in my opinion Ginko and WSE are risky and worthless to invest in. I wouldn't ever trust them.

There are many problems actualy evaluating a bond, because usualy you dont buy bonds in the middle of a civilwar, but since this is "just SL"...

If ginko actualy starts buying back it's debt, so far it hasn't happened (atleast not in any noticable volumes), the problem is, why wouldnt the investor just buy bonds that he knows will pay the rate or buy them back at IPO price, heres my small bond comparsion:

TGB:
IPO was at 100, paying 13 L$ each month.
Here you get a very nice divident and in worst case you get 100 L$ back for each bond you invest in.

BOND:
IPO was at 1, paying 0.06 each month, just like with TGB you get 100% guarantee that your money will be back.

HCB:
IPO was at 100, paying 0.20 each QUARTER (this means less than 0.06 monthly since you could aswell go for BOND and reinvest monthly). This bond still has potential, and risk just as good as with BOND and TGB.

GPB:
Currently trading at 0.25, paying 0.03 each quarter, just like with HCB since this bond doesnt pay each month you miss the advantage of reinvesting and compounding more interest. While it's price is very low the divident is not bad, but not at all comparable to TGB, not even close. Whats prety unique about this one is that you're buying a bond with a company that has major liquidity problems, a company that cannot set a date for buyback nor say a price, a company that has never accepted to show any financial reports, and refused to do so even after entering a stockmarket (wich i find prety damn amazing), they dont even wanna answer what they invest in, this bond is just a big mystery. I actualy cannot compare this one to any of the above becasue it fails on so many factors, the risk here is 100%, whatever you buy you can lose entirely. For that reason it's completely impossible to set a value, the only price i'd recomend (just if you realy must buy this one for speculative reasons) is ginko's own 0.100001 a bond, you can still lose anything you invest but atleast you're not risking more than ginko themself (from what they claim).

Conclusion: If you like VERY high risk, go for GPB, in any other case pick one of the 3 other bonds that pay well. (personaly, i wouldn't touch it)

Well, as they're perpetual bonds paying interest every 90 days in my opinion they're more comparable to 3 month term accounts plus a risk premium rather than traded bonds.

"What are Ginko Bonds worth?"

Diddly squat, as far as I can tell. It's just a further extension of the previous con.

Broccoli

Regardless of the risk-value of GPBs as "bonds," there's the proven track-record of Ginko debt being transmogrified into some other instrument at a moment's notice. What assurances have we that this doesn't apply to GPBs, just because they're WSE-listed?

I think none.

In a way, it's already happened to GPBs: the holders of the May GPB offering were holding quite a different risk instrument than what they have now, after the influx of GF bank depositors.

Look at the GPB Prospectus on the WSE website and compare it with any of the legitimate bond issues. Notice anything missing?

Add to this the partial ownership of WSE by an officer of Ginko itself. Whatever conflict-of-interest got this bond listed on the WSE, missing half its Prospectus, could come into play whenever the whim arises to issue another unbacked secondary offering.

It's really hard to justify putting a lot of time and energy into evaluating a bond when there exists no particular reason to believe that the terms of the bond won't change with the next update to the WSE website.

No, they weren't.

If you give me all YOUR money ... i will give you a "FairyLand Bond" these bonds will give you a return of 30% per annum ..... of course i wont be here in 11 months anyway *lol*

There isnt enough money to pay the debts, becasue there isnt any investment so the bonds are worthless. BUT if you did invest in Ginko then greed got the better and now you have lost your initial investment but the question is how much money did you get back apart from your intial investment.... how much was ACTUALLLY lost.

All the same .. I think i will leave my Lindens under my bed for now....

Marty

In response to the simple statement of fact that the May GPB offering was for a very different risk instrument than the current GPB:In what conceivable parallel universe can this be anything but a bald-faced lie? Just for starters, the original issue had a call price of four times par; now they can be called at face value. The dividends have changed from monthly to quarterly, meaning the holder's capital is at risk longer before any dividend is paid. Not to mention the fact that the original bonds were a voluntary investment by the bond holders; since then, over 100 million bonds have been issued to GF bank depositors *involuntarily*, which is dilutive beyond measure.

If Ginko had any money left, they wouldn't have had to lock people out of withdrawing their funds. So how can their bonds be worth anything?

P.T. Barnum was right. There's a sucker born every minute.

https://www.wselive.com/research/announcement_detail/2212

Bingo!

They are worth some amount of what Nick P's honor is worth.

Id be more specific but I am not good with math involving small fractions, sorry.

and (as referenced on another thread) , which annouces that each share in Ginko Currency Services is now converted to 2 GPBs.

So... does the WSE board have to approve this sort of conversion, or can one just mint fresh bonds from pocket lint on this exchange? (Not that GCS shares were especially lint-like; I just mean: are there any rules at all??)

In my opinion its either

A) a smokescreen to drive the price through the floor so Nick can buy up the bonds with an Alt.

B) an attempt by WSE to keep their reputation strong by "regulating" Ginko. Ginko will still use an Alt or a freind to buy up the bonds to retire the debt.

C) A carefully designed Cover to allow Ginko to collapse publically, blaming WSE.

Seeing as 62% of GCS shares are owned by a Ginko employee that's not even as bad news as it first sounds. And yes, there are rules: CEO's can't just play around the way they like. But it's best to direct that question to a WSE official.

There are currently 804,219 shares listed of GCS, prior to the announcement there were 10,000,000 shares listed but Nich owned 92% of them and now owns 0%. It would appear that WSE has tightened controls on Ginko management. Nich also liquidated all his holdings in LOT effectively gutting that stock. Who knows the behind the scenes battles currently being waged between these two organizations but it would appear that the WSE is now in control.

Sort of reminds me of the battle between 'good' and 'evil' in professional wrestling.

Look who is on whose team *this* week!

That WSE announcement up there a ways was interesting. So Ginko can't buy it's own debt on the cheap - so? Just a few clicks to do it with an alt.

....so more good news then

How is paying people back what you owe them bad for bondholders?

It'll take several years?

No shit, sherlock.

I bought back the GCS shares owned by me (there is a "Share buyback" function available for company administrators) and asked Luke to do the conversion.



I think anybody that bought at L$0.05 overpaid. It's technicaly possible that they might survive, somehow. It is not however, at all likely.




There is no behind the scenes battles. I think Luke's decision is really, really, really stupid. I think it will harm bondholders (GPBs price has already started going back down). And I told him that. That is the extent of the "battle" taking place. He regarded the bond market operations as unethical, I regard the ban on bond market operations as unethical. It harms bondholders more than it harms me though, and as the bondholders are the ones pushing Luke to do this, I'll just say "Alright boss" and move on. Unless bondholders smart up and pressure Luke into reversing his decision, the ban will stay in place, because I have no intention of fighting Luke on the matter.

A bond seller is not going to get the face value of L$1 per bond, regardless of who buys his bond, except now he gets even less. And now, those who were willing to wait to be bought out at L$1, will have to wait a whole of a lot longer. The speculators buying cheap bonds in order to get paid more by me are going to have to wait a whole of a lot longer. Everybody is harmed. Nobody benefits.

You and i both know it wont harm bond holders anymore than they are already harmed.

You got your alt yet?

We all know thats what your going to do.

Judging by the responses I'd say we're veering towards scenario B.

I did think of doing that, but decided against it. Even though the ban is unethical, I have little to gain by defying it.