There are a lot of places where the credit ratings are hardcoded (to borrow a term) into funds. There are pension funds and other vehicles that might be bound to only invest in AA rated companies.

So if a company drops their AA rating it could force them out of a lot of funds and investment vehicles.

This complicated vehicle where the debt and assets are in another LLC isn’t actually tricking anyone in finance. If you’re reading about it from blogs then it’s already common knowledge. The structure isn’t actually a one way trick, it’s a set of tradeoffs and protections for the company. They probably could have achieved better terms going direct but with higher risk.

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everybodyknows 19 minutes ago | parent | next [-]

> isn’t actually tricking anyone in finance.

Surely the ratings agency people are "in finance"? Or are they in on the game, and sliding their way back to 2008, writing ratings for "deals structured by cows"?

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illwrks 3 hours ago | parent | prev [-]

Instinctively I try and simplify things. It this was a person with an excellent credit score, it’s as if the person is taking on extra debt to start to create something they need, but trying to hide it.

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Aurornis an hour ago | parent [-]

But that simplification isn’t the whole story. If that person took on debt as part of an LLC they started, not their personal bank account, then they have certain protections in the event of default of the LLC.

They will also have to pay a premium and give up more for debt to the LLC because the lenders know this.

The same is true for Meta.

The finance world isn’t blind. None of us hear are stumbling upon hidden knowledge that the lenders didn’t already have.

	▲	illwrks 8 minutes ago \| parent [-]
		Ah ok, now that makes sense. Thank you.