Debt, equity and a third thing that might work better

Re:Debt, equity and a third thing that might work better by d4nt on Monday November 16, 2009 @08:04AM (#944360)

Most people will want to cash in their investments at some point. In order to facilitate that we'd need a secondary market in these instruments so people could sell them on. The price would then vary based on future earnings projections. Either that or the understanding is that the payments continue until some fixed point in time, or until the investors death. So, depending on how you look at it, these are either dividend paying shares, corporate bonds or a kind of annuity. All of which exist already.

EDIT: although I'm not sure if anyone's really doing corporate bonds that are linked to profits, that might be new.

Having said all that, I agree with Seth that society could do with being a lot more creative in how it funds businesses.

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Re:Debt, equity and a third thing that might work better by huntse on Monday November 16, 2009 @11:26AM (#944663)

Yup having a secondary market is extremely important. That's why it already exists (just like mezz finance, which is what he has reinvented here, also exists). The idea of having an instrument that pays linked to a particular income stream is also not new - covered bonds, asset-backed securities, pfandbriefe etc for example all work this way.

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Re:Debt, equity and a third thing that might work better by huntse on Monday November 16, 2009 @11:29AM (#944667)

...oh, and covered bonds linked to a specific income stream is also not new. XS0271006602 for example is a covered bond linked to the income stream on a chain of pubs in the UK.

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