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xkrikl

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Quote from: PatrickHarnett on April 17, 2012, 05:24:35 PM

Quote from: stochastic on April 17, 2012, 04:37:30 PM

Quote

In the event that BS&T stops payments or changes its terms and conditions so that the intended pass through of interest is either stopped, pays lower interest or at a schedule that does not align with PPT bonds, PPT reserves the right to buy back the currently issued bonds by paying the coupon (currently 1% per day, accrued, simple interest) to current holders.

2. In the event that interest payments from BST is below your expectations then PPT can buyback the bonds at 1% per day on the initial bond listing price of 1.00 BTC per bond.

The wording was intended to be tighter than simply "below expectations". It is to cover the event where Pirate stops and winds up the whole thing, or changes the interest rate scheme materially so that we cannot pass through the intended 1%/day rate. It does not give us the right to issue the bonds on day 1 at a premium and then immediately buy them back.

Well defaulting is probably taken into account by everyone's risk appetite.
But this thing of early buyout will drag the bond price down during bond auction and also later on secondary market as the probability of change in the conditions of BS&T is high. What about changing it to p*(1+0.01x)/1.28 instead of 1+0.01x where p is the average price in the auction and x number of days since auction. I understand that this would push you to invest more than 1BTC per bond sold into BS&T which I guess wasn't originaly intended. Take it as suggestion that might bring auction prices higher and thus increase your profit.

EDIT:
stochastic caught me on this as I didn't do my home work to check the formula
the idea was to get p after auction (x=0) and 1.28 at maturity (x=28)
the correct one is: p+(1.28-p)*x/28

PatrickHarnett

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Quote from: stochastic on April 17, 2012, 08:00:03 PM

How much funds are in the PPT default thing?

To cover the first round of bonds, probably 650-ish (Burt has the exact number). That's based on 7*100 less setup fees which were around 50. With additional weeks and bonds, additional capital will be injected to maintain the capital reserve. With a planned maximum of 8000 total, 25% it should build to 2560 coins in the next couple of weeks.

stochastic

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How much funds are in the PPT default thing?

Rygon

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Quote from: Sukrim on April 17, 2012, 06:35:10 PM

Oh, just as a snapshot, as it might be interesting in the future:
Currently (~2 days before the IPO) there are bids for 606 shares totalling 618.1834 BTC (giving operators a bit more than 4 BTC after accounting for the ticker symbol). There might be more to come though, considering the massive buys in mining bonds recently, quite a few people with big accounts seem to have started trusting GLBSE - or gotten around to use it, now that it no longer has this command line client (which I reallly loved btw.).

Even if all the shares are sold at 1.00, the operators will still have a profit because Pirate pays 7% per week, compounded over 4 weeks, or 28 days, is 31% - not 28%. It seems pretty reasonable though, considering the work to set up the bonds.

The00Dustin

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Quote from: notme on April 17, 2012, 06:40:38 PM

Even if you payout early? Or would that be 25% of (1.0 + 0.01*days)?

If there is a default, they won't be "paying out early." A default means they don't get the money they invested back at all, and they are giving .32 back total for the >1.0 you paid. Paying out early means the interest rate they were getting dropped to where they couldn't pay out .28 at the end of the 28 days, so they pay out for the days they could pay (the days that passed before the change) and don't sell anymore.

ETA: So default = you get .32 back per share & pay out early means you get (1.0 + 0.01*days) with the "insurance" not being used (and if you paid more over 1.0 than the number of days, you lose money, but much less than you would lose in a default).

stochastic

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Quote from: ?? on ??

Yes, I was expecting this terminology question to come up sooner or later. So:

The thing you are buying will be worth exactly 1.28 BTC 28 days from when you buy it. So in standard terminology 1.28 is the face value and it is a zero coupon bond. I ~~should~~ will go back and redo the OP to reflect this more standard terminology.

Now given that terminology I need to more exactly describe the insured value. Thinking about that now and I may be able to simplify the equation and description so please bear with me and I will get back to you all on that.

I have to go out now and I will get to all the other questions and concerns raised but I wanted to anounce this first:

The PPT stockholders voted on it and we have agreed to insure 25% of the face value of all outstanding bonds at all times against a Pirate default. The face value of the bonds is 1.28. 25% of that is 0.32. So in the case of a default you will be paid 0.32 for each bond. More later!

This is great to have a exact value.

notme

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Quote from: ?? on ??

Yes, I was expecting this terminology question to come up sooner or later. So:

The thing you are buying will be worth exactly 1.28 BTC 28 days from when you buy it. So in standard terminology 1.28 is the face value and it is a zero coupon bond. I ~~should~~ will go back and redo the OP to reflect this more standard terminology.

Now given that terminology I need to more exactly describe the insured value. Thinking about that now and I may be able to simplify the equation and description so please bear with me and I will get back to you all on that.

I have to go out now and I will get to all the other questions and concerns raised but I wanted to anounce this first:

The PPT stockholders voted on it and we have agreed to insure 25% of the face value of all outstanding bonds at all times against a Pirate default. The face value of the bonds is 1.28. 25% of that is 0.32. So in the case of a default you will be paid 0.32 for each bond. More later!

Even if you payout early? Or would that be 25% of (1.0 + 0.01*days)?

Sukrim

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Oh, just as a snapshot, as it might be interesting in the future:
Currently (~2 days before the IPO) there are bids for 606 shares totalling 618.1834 BTC (giving operators a bit more than 4 BTC after accounting for the ticker symbol). There might be more to come though, considering the massive buys in mining bonds recently, quite a few people with big accounts seem to have started trusting GLBSE - or gotten around to use it, now that it no longer has this command line client (which I reallly loved btw.).

notme

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Quote from: Sukrim on April 17, 2012, 05:57:46 PM

Quote from: stochastic on April 17, 2012, 01:07:30 PM

What do you think is Pirate's probability of defaulting?

I personally think it's 100% - but the real question is: Will he default during the 28 days I have invested in this bond? Wink

Nah, but he surely will lower his interest rates like he has before.

stochastic

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Quote from: PatrickHarnett on April 17, 2012, 05:50:58 PM

I'm sure Burt will pick up the extra words.

As for the "immediately" issue, it's more about the trigger event. Personally I am assuming that at some point in the future there will be a day when this stops - either with some notice, or possibly no notice. At that stage there should be four bonds in operation, cycling through a week apart. To pick a day for illustration, if this was day#2 of a bond, there would also be day 9, 16 and 23 for each bond respectively. Also, I am not sure if glbse allows the premium paid on each issued bond to be tracked to the purchaser as ideally some kind of pro-rating/refund would be a nice addition too.

The world isn't perfect, and this is one of those cases (like buying a share) where the value might go down as well as up. We're trying to cover the events before they happen, so the discussion is useful.

Yea I am just trying to understand all the risks. It would suck if to pays 1.06 for the bond and on the 5th day it is called for 1.05.

Sukrim

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Quote from: stochastic on April 17, 2012, 01:07:30 PM

What do you think is Pirate's probability of defaulting?

I personally think it's 100% - but the real question is: Will he default during the 28 days I have invested in this bond? Wink

PatrickHarnett

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I'm sure Burt will pick up the extra words.

As for the "immediately" issue, it's more about the trigger event. Personally I am assuming that at some point in the future there will be a day when this stops - either with some notice, or possibly no notice. At that stage there should be four bonds in operation, cycling through a week apart. To pick a day for illustration, if this was day#2 of a bond, there would also be day 9, 16 and 23 for each bond respectively. Also, I am not sure if glbse allows the premium paid on each issued bond to be tracked to the purchaser as ideally some kind of pro-rating/refund would be a nice addition too.

The world isn't perfect, and this is one of those cases (like buying a share) where the value might go down as well as up. We're trying to cover the events before they happen, so the discussion is useful.

stochastic

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Quote from: PatrickHarnett on April 17, 2012, 05:24:35 PM

Quote from: stochastic on April 17, 2012, 04:37:30 PM

Quote

In the event that BS&T stops payments or changes its terms and conditions so that the intended pass through of interest is either stopped, pays lower interest or at a schedule that does not align with PPT bonds, PPT reserves the right to buy back the currently issued bonds by paying the coupon (currently 1% per day, accrued, simple interest) to current holders.

2. In the event that interest payments from BST is below your expectations then PPT can buyback the bonds at 1% per day on the initial bond listing price of 1.00 BTC per bond.

The wording was intended to be tighter than simply "below expectations". It is to cover the event where Pirate stops and winds up the whole thing, or changes the interest rate scheme materially so that we cannot pass through the intended 1%/day rate. It does not give us the right to issue the bonds on day 1 at a premium and then immediately buy them back.

Ok thanks I see, can we get, "It does not give us the right to issue the bonds on day 1 at a premium and then immediately buy them back," in the contract? Also by immediately is there a cut-off point for that such as 1 hour or 1 day?

PatrickHarnett

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Quote from: stochastic on April 17, 2012, 04:37:30 PM

Quote

In the event that BS&T stops payments or changes its terms and conditions so that the intended pass through of interest is either stopped, pays lower interest or at a schedule that does not align with PPT bonds, PPT reserves the right to buy back the currently issued bonds by paying the coupon (currently 1% per day, accrued, simple interest) to current holders.

2. In the event that interest payments from BST is below your expectations then PPT can buyback the bonds at 1% per day on the initial bond listing price of 1.00 BTC per bond.

The wording was intended to be tighter than simply "below expectations". It is to cover the event where Pirate stops and winds up the whole thing, or changes the interest rate scheme materially so that we cannot pass through the intended 1%/day rate. It does not give us the right to issue the bonds on day 1 at a premium and then immediately buy them back.

stochastic

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Quote from: BurtW on April 13, 2012, 06:33:47 PM

Pirate Pass Through (PPT) Bonds

Pirate rates for the small investor!

Each week we will issue up to 2000 bonds.

These bond auctions will take place every Saturday morning at 2 AM UTC. That is every Friday evening at 7 PM PDT, 8 PM MDT, 9 PM CDT, 10 PM EDT

These bonds will have a face value of 1.00 BTC when purchased but will be bought back for 1.28 BTC exactly 28 days from purchase on Saturday morning at 12 AM UTC. That is every Friday evening at 5 PM PDT, 6 PM MDT, 7 PM CDT, 8 PM EDT.

Quote

Doing it this way allows customers who wish to bid on the next auction two hours in which to place their bids and gives everyone two free hours of interest on their money.

The face value of all bonds sold will be deposited directly into a account at Bitcoin Savings and Trust (formerly First Pirate Savings and Trust)

We reserve the right to buy back the bonds at any time during the month for the 1% per day prorated daily rate. In other words if we buy back the bonds 15 days after purchase you will get 1.15 per bond. Further clarification of this point:

Quote

In the event that BS&T stops payments or changes its terms and conditions so that the intended pass through of interest is either stopped, pays lower interest or at a schedule that does not align with PPT bonds, PPT reserves the right to buy back the currently issued bonds by paying the coupon (currently 1% per day, accrued, simple interest) to current holders.

These bonds are partially insured and backed by a cartel of some of the most reputable and well known BTC lenders in the lending forums: BurtWagner, PatrickHarnett, dollartrader, hashking, imsaguy and ineededausername.

In the case of any default by BS&T you will receive at least 25% of the original face value of the bonds from the capital reserves of PPT.

So PPT is basically stripping the interest from a Bitcoin Savings and Trust (BST) saving account and offering 2000 bonds per week with a face value (the amount paid to the bondholder at maturity) of 1.28 BTC per bond that will be paid 28 days after they are released with 2 conditions.

1. 25% of the "face value" is covered by loss in case of a default and loss of principle from BST.

I have a question about this. You state that face value is the PPT bonds is 1.00 BTC, but the actual definition of face value for a bond is the amount paid to the bondholder at maturity, thus the actual face value of PPT.A bonds would be 1.28 BTC. Are you saying that in the event of a BST default and loss of 100% of principle that the bondholders would receive 0.32 BTC per bond (1.28 BTC X 25% = 0.32 BTC) or 0.25 BTC per bond (1.00 BTC X 25% = 0.25 BTC)?

2. In the event that interest payments from BST is below your expectations then PPT can buyback the bonds at 1% per day on the initial bond listing price of 1.00 BTC per bond.

Does that seem like an accurate understing of the contract?

stochastic

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Quote from: ?? on ??

If you do not scroll down the insert in ineedausername's post you miss the tl;dr summary:

Quote

As one example [of what the full chart shows] if you think Pirate has a 15% chance of defaulting you are expected to break even on bids under or at 1.12.

If you have a Pirate invite you should:

Code:

  bid under 1.04 if you have >2000 BTC
  bid under 1.12 if you have >500 BTC
  bid under 1.16 if you have >100 BTC

What do you think is Pirate's probability of defaulting?

MPOE-PR

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It does stand for public relations.

MPOE-PR

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Quote

And I'm guessing I can't buy them below face value?

Actually, yes you will be able to. There's going to be a synthetic issue (pretty much a vehicle for Mircea Popescu to short this entire operation) offered on MPEx so stay tuned.

imsaguy

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Don't send me a pm unless you gpg encrypt it.

I can haz PPT.A

The00Dustin

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I just noticed that GLBSE says 100% majority required to make any changes. If you don't change that before you issue shares and someone doesn't send shares back, that might theoretically mean you won't be able to change anything (unless you are able to recall shares by the time it matters). This may not be a problem since your contract currently says see the forum, so you could issue 2000 whether you sell them all or not and then wouldn't need to issue more later when you want to sell up to 2000, however, it is probably worth considering, and it may be best to have some terms in the contract in case you have to deal with Nefario directly on anything.

Topic: . - page 34. (Read 67488 times)