alt Hacker NewsThere 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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Funds and investment vehicles subtly lowering their standards while the downstream investors remain clueless is how we got 2008, no?
> 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"?
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.
Is anyone actually limited to only AA+? The usual meaningful separation is investment grade (AAA, AA, A, and maybe BBB) vs junk (everything else). (I don't think Meta would meaningfully lose access to credit if they were downgraded to A.)