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07-04-26 carib
| Savo: your post describes the details of a debt sustainability exercise. Fine. The immediate question would be what interest rate can Veny pay in the initial 10 years. But, in your opinion, if such exercise materialises, what would be the exit yield of the restructured debt, which probably implies the rates Veny would have to pay to issue new debt? |
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07-04-26 savo
How much bonded debt can Veny support?
i think the question should be "how much interest can veni pay during the next 10 years"?
In 10 years time veni should be producing 5mm barrels per day... and amorts should start.
By then... if that happens... veni will have no problem paying principal with new debt.
This restructuring should be seen as an exercise in putting the financial house in order... not as a solution for the next 100 years...only for the next 10.
So..if i would be veni i would not engage in the complex concept of gdp or oil warrants or a holistic solution (as they say now)... I would simply say... for now... i can pay say X bn per annum.. iwant x% haircut on total claim (given that i was subject to sanctions) and i do not want any principal payment for the next 10 years... |
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07-04-26 carib
Merlino/Savo: obviously we would very much welcome a Venezuela bonds high recovery solution.
They owe about 100BB, which today is valued about 25BB, and clearly would like new credit.
How much bonded debt can Veny support?
IMHO there must be a debt for equity (concessions) component to facilitate a viable. non confiscatory solution.. |
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07-04-26 victor
savo, yes, tks
interesting where the article was posted: bitcoin magazine |
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07-04-26 savo
| on a different matter... the football world cup is on the way to be a competition between different groups of African descents... wearing various national shirts against....Argentina. |
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07-04-26 savo
victor... more on Saylor's ponzi...
There is now $15 billion sitting in three securities being marketed to bitcoin holders as the safer, smarter way to access bitcoin exposure: Strategy’s preferred stack, STRC, and SATA. The pitch is identical across all three. Tax-favored. 11.5% income. Backed by bitcoin. Money-market risk. 82.7% of the buyer base is retail. Every word of that pitch is wrong, and the security those buyers actually own is built to fail in exactly the bitcoin environment it claims to harness.
The Pitch Is a Story. The Capital Structure Is the Truth
STRC is an unsecured, subordinated, perpetual preferred equity. No maturity date. No lien on a single satoshi of Strategy’s bitcoin treasury. The dividend is discretionary, which means the board can cut it at any monthly meeting with no notice, no remedy, and no vote. S&P rates the issuer B-, four notches into junk territory. None of that information appears in the marketing.
Stack those features against the words in the pitch. “Backed by bitcoin” describes a security with no claim on a single coin. “Money-market-like” describes an instrument rated four notches below investment grade with no maturity and a discretionary coupon. “Safe income” describes a payment the board controls and the funding source for which is the security itself. Each phrase in the marketing is contradicted by the indenture.
That is not a money market fund. It is speculative-grade credit-like product dressed in safe-income marketing, and 82.7% of it sits on retail balance sheets. Of the $10.7 billion notional outstanding for STRC, roughly $8.8 billion belongs to retail bitcoin holders concentrated in a single junk credit. There is no polite phrase for that exposure. It is a bag, and retail is holding it.
The Funding Mechanism Eats Itself
The structural risk in STRC is not that the dividend is high. It is that the dividend cannot be funded out of the business. Strategy’s underlying software business produces roughly $477 million in annual revenue. Total preferred dividend obligations now exceed $1.2 billion, a ratio of 3.5 to 1. The gap is not closed by earnings. It is closed by issuing new STRC shares at or above par, or diluting common shareholders of MSTR, with the proceeds recycled to pay the existing holders.
That is a reflexive funding loop. It works when STRC trades above par and breaks the moment it doesn’t. Anything that pressures the price, a credit downgrade, a missed dividend, a bitcoin drawdown, a capital markets shutdown, removes the very mechanism the dividend depends on. There is no plan B in the indenture. There is no lien on bitcoin to seize. There is no operating cash flow to redirect. There is only the next share issuance, and the next, until either bitcoin compounds the company out of the problem or the structure jams.
Then there is the dividend ratchet. The coupon has moved monthly from 9% to 11.5%, embedding $268 million in permanent annual obligations into the structure. The rate has only ever moved in one direction. Each monthly increase makes the funding gap wider, the share issuance more dilutive, and the price floor harder to hold. The mechanism designed to keep STRC attractive to new buyers is the same mechanism that compounds the burden on the issuer and accelerates the run on the funding loop when stress arrives.
The Mythical Institutional Buyer and the Math That Buries Him
The standard defense of the Digital Credit category goes like this: surely informed institutional capital is on the other side. Insurance companies need yield. Pension funds need duration. Fixed-income desks need product. Digital Credit is the institutional bridge to bitcoin.
That defense collapses on its own logic. Any institution that allocates to an unsecured, subordinated, perpetual preferred layered on a bitcoin treasury must first underwrite the underlying asset. Any institution that does the work to underwrite bitcoin allocates directly to spot bitcoin, where the credit risk vanishes and the path-dependent fragility goes with it. The institutional buyer who is both informed and rational does not exist in this product. The buyer who does exist, at 82.7% concentration, is retail.
The path-dependency math finishes the argument. Across 5,000 simulated bitcoin paths at a 10% compounding rate, the credit model produces a 12.3% probability of formal default, a 21.9% probability of dividend deferral, and a 50.7% probability of at least one forced bitcoin sale by the issuer during the eight-year cycle. At a 15% compounding rate, STRC has a 44.6% probability of ending below $85 even on paths where bitcoin recovers to new highs.
A bitcoin holder’s terminal wealth depends only on where bitcoin ends. An STRC holder’s outcome depends on every drawdown in between, because the same mechanisms that pretend to protect the dividend in calm conditions become the mechanisms that consume the holder’s principal in stress. The product is most fragile in exactly the bitcoin scenarios the underlying asset absorbs without consequence.
https://bitcoinmagazine.com/markets/strc-is-junk-credit-in-a-bitcoin-costume-and-retail-is-holding-8-8-billion-of-it |
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07-04-26 savo
merlino...in our long lives of restructurings... the pattern has always been the same... insiders and wall street want to buy bonds that nobody wants to sell ...hence they produce esoteric calculations with static exit yields that try to present the bonds as fully valued when most of the upside is still to come...
in this case the advisor seems to be on that camp too mixing apples and bananas... local and external debt... bonded debt issued under us law with proper documentation with IOUs of questionable legality and amount and court judgements produced at a time when the US government was on a quest to destroy veni... which is not the case now... thus.. many of those judgements will not require a cash payment but an asset recovery.
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07-04-26 Merlino
Carib, Yes
However it is needed "only" about an additional 77% appreciation to get the same $ amount that the previous 320% appreciation you have calculated.
52 x 1.77 = 92 = 52 + 40 = 12 + 40 + 40
An additional 77% appreciation may look excessive however it is "only" 92/215 = 43% of total claim (at future mkt value) ...not preposterous I would say
I know nothing about the "ins" of this situation however would like to be corrected if my rough assumptions look out of the rational.
I would venture to say they are not as it looks rather clear/visible that out of traders/speculators current holders do not seem to be eagerly selling/distributing |
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07-04-26 victor
| En un sofocante ambiente por la ola de calor extremo que azota la costa este de Estados Unidos, Donald Trump se dispone a dar esta noche un largo discurso a sus seguidores en Washington para celebrar el 250º aniversario de la firma de la Declaración de Independencia del país en Filadelfia. Pese a las indicaciones del Servicio Meteorológico Nacional, que advirtió a la ciudadanía que debería evitar periodos prolongados al exterior en la capital, Trump está decidido, a sus 80 años, a desafiar al tiempo: “El 4 de julio hará aproximadamente 107 grados (41 grados Celsius) y yo voy a ir”, dijo el miércoles, durante la inauguración de la Biblioteca Presidencial Theodore Roosevelt en Dakota del Norte. “Y voy a dar un discurso realmente largo solo para demostrar que puedo hacer cualquier cosa”. |
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07-03-26 victor
20 million!!
//
The first day of former Iranian Supreme Leader Ali Khamenei, who was killed with family members at the start of the US-Israel war on Iran, has concluded.
More than 20 million people are expected in Tehran for the funeral over the next several days |
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07-03-26 carib
Merlino: hypothetically, someone aware in advance of US long term plans, could have bought millions of PDVsa 2022 @ about 12 cents on the $ one year ago, and sold them back @ 52 cents on the dollar last May, making an easy 320% profit.
If a very friendly and credible restructuring offer was to be made, given the claim for the said bond is 215, it could be imaginable that an additional 100% profit could be made, but an additional 300% potential profit is not easy to imagine.
That is the point I was making.
Advance knowledge of political/military intentions provided an easy way to triple your money fast.
Advance knowledge of intentions concerning a possible restructuring could provide guidance for further profits by holding or shorting bonds.
It is not advisable to play cards when some players know the content of the deck in advance, and others do not (unless you are the cheating one).
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07-03-26 Merlino
Potential further upside is objectively more limited.
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Imho true in % however not necessarily so in actual $ (holding from the lows) which is what finally counts |
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07-03-26 carib
Savo: I just note the big move up of Veny bonds happened between the time Trump took office and May 2026.
Potential further upside is objectively more limited. |
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