Topic: [BTC-TC] LTC-ATF.B2 (Bond paying 0.05% per day interest) - page 2. (Read 7342 times)

Transparency of backing assets - LTC-ATF publshes a weekly report detailing what backs the bonds.  Details of specific securities held is NOT listed but the vast majority of assets (usually 85%+) are specifically detailed (cash holdings and shares which we also run pass-throughs to).  So I don't just say I have enough assets, I also explain exactly what the majority of them are (and it's nearly all cash).  Likely we also have a higher ratio of total assets to debt.

But if you're absolutely certain TF has enough assets to back Coinlenders in all likely circumstances then it DOES offer a better rate of return at present.  Which is the other point - Coinlenders' rate may change in the future : likely downwards if he gets enough users for input.io (where he can use deposited cash without having to pay interest).

Right now if you believe Coinlenders and LTC-ATF have equal risk and equal backing capital per borrowed BTC then Coinlenders IS the better option for you.

Are there any advantages over coinlenders (0.061% per day)?

Doubt it'll have much impact on PMBs as:

1.  There won't be much of it for sale - LTC-ATF doesn't increase BTC-denominated capital requirements that much (there's a few specific reasons why it's increasing right now).
2.  It'll pay less per day than a PMB - which is about as far as most purchasers of PMBs look (or they wouldn't be buying them at the prices most sell for in the first place).

I don't think there'll be any effect. PMBs pay out a higher dividend-% at current difficulty and are rarely callable or have a garantueed buyback. With this bond, you're garantueed to get 99% of the face value back (minus exchange fees) due to the bid wall that Deprived will establish, which justifies the lower daily payments.

True bonds and PMBs are really different things and can't be compared easily.

Glad to see this on BTC-TC. It will be nice to have another solid option for BTC-denominated investing besides Just-Dice and AM.

It will be interesting to see how the 'daily interest payment' nature of this security will affect the price of PMBs (this is obviously a true bond, not a Perpetual  Mining Bond).

At present the bond is awaiting moderator approval - which usually takes a few days.

INTRODUCTION

LTC-ATF.B2 is the second bond issued by the fund I manage (LTC-ATF).  The first bond (you'd never guess it was LTC-ATF.B1) has been on offer since last year on LTC-Global and pays a higher rate of interest than this one.  Once this is launched it is intended that no further LTC-ATF.B1 will be sold (none have been placed for a while already).

This one is being issued for two reasons:

1.  To reduce the cost of capital.  Whilst LTC-ATF could comfortably continue paying the rate we do on LTC-ATF.B1 there is no reason for us to do so if we can raise capital at a lower rate.

2.  To make maintenance easier.  With this bond being transacted in BTC rather than LTC we are able to leave bids and asks up unattended without having to worry about exchange-rate movements making the prices wrong.

Capital raised from these bonds is used to enable LTC-ATF to trade BTC-denominated securities whilst maintaining minimal BTC exposure (by balancing the majority of BTC-denominated assets against BTC-denominated liabilities).


OVERVIEW OF TERMS

Each bond has a face value of 0.01 BTC.
Bonds will be sold at face value (or into such higher bids as exist).
A daily dividend will be paid of 0.05% of face value - so .35% per week, about 18.2% per year (assuming no compounding).
Bonds are backed by all assets of LTC-ATF (though LTC-ATF.B1 has a senior claim on them).
The bond has no fixed expiry date but a bid-wall will be maintained at 99% of face value to provide liquidity even if there are no bids from others.
The bond IS callable - at 105% of face value.  That option is only intended to be used if circumstances change such that the bonds can no longer be maintained - it will NOT, for example, be used to try to sell cheaper bonds in the future (hence LTC-ATF.B1 not being recalled now).
If LTC-ATF closes down then bonds will be paid out at 100% of face value - an exception to the general terms for calling the bond.


BACKING

LTC-ATF is contractually obliged to ensure the following :

That it holds more BTC-denominated assets than it has BTC-denominated liabilities.
That it holds total assets (excluding securities held on behalf of pass-throughs) with a value of at least 166.666% of all liabilities.  That is to say that liabilities may not exceed 150% of net assets.

In practice I aim to keep liabilities below100% of net assets (right now they're at 41.81%).

LTC-ATF predominantly trades/speculates rather than invests and so maintains very high liquidity compared to investment funds.  Typically 85-90% of all assets are cash (BTC or LTC) - at this instant 91.46% of assets are in cash.  Although we are heavy in cash that does mean the capital is inactive - most is backing Bids of securities or currency orders (to maintain our target currency ratios even when exchange-rate moves whilst I'm afk) with the remainder providing cover against short-term liquidity needs.

As of this instant LC-ATF's situation is (all numbers approximate):

Gross Assets : 849 BTC
Liabilities : 251.5 BTC (LTC-ATF.B1 - 250 capital plus 1.5 dividend due for payment shortly)
Net Assets : 598 BTC

Cash position (mixed BTC/LTC - just under half of it BTC) : 776 BTC

Our position is VERY sound financially.


RISK

This is addressed in more detail in the contract.  But briefly:

LTC-ATF bears all exchange-rate risk - this is mitigated to near zero (for bonds) by holding BTC-denominated assets exceeding BTC-denominated liabilities.

LTC-ATF bears all trading-related risk - this is mitigated as far as possible by spreading trading widely, avoiding multiple exposure to the same CP and not holding positions for long.  It would take massive - and rapid - losses for any trading loss to impact bonds.

Trading Platform Risk - this cannot be mitigated : we cannot avoid CP risk in respect of trading platforms (exchanges) that we use.  This risk IS shared with bond-holders (who accept such risk when they first deposit to exchanges) but if losses arise from this then they are then recouped from future LTC-ATF profits (but only after LTC-ATF.B1 has been fully repaired).


QUANTITY TO BE ISSUED

Initially 5000 bonds will be sold (50 BTC worth at face value) with there likely to be another similar quantity released later in the week.  There MAY be more released shortly after that - depending on certain other developments.  In general these will be issued whenever LTC-ATF needs (and can afford without risk of having to sell more units) more capital and/or when we manage to buy back LTC-ATF.B1 (reducing cost of existing debt).


RELEVANT LINKS

Listing for this bond : https://btct.co/security/LTC-ATF.B2

The below links provide further information on LTC-ATF.

The listing for the fund at https://www.litecoinglobal.com/security/LTC-ATF
The LitecoinTalk thread for the fund at http://forum.litecoin.net/index.php/topic,657.0.html
The Bitcoin forums thread for the fund at https://bitcointalksearch.org/topic/ltc-global-ltc-atf-112876

If viewing LTC-ATF on the market please be aware that there was a 100:1 split on it executed today - it has NOT suffered some massive losses.