Re: [BETA] Blue Mountains revamp
Posted: Tue Jun 02, 2020 9:42 am
I am coming to the conclusion that the real problem is that I'm too good at using bonds. Of course, I did design the system I'm trying to rort so I suppose that's an unfair advantage.
I reduced the kick-in points to $2m, $4m and $6m. IOW, you can only have $1.5m of debt before the first 2 level reduction in your credit rating. This is much more severe than the original scenario, which only ever dropped it one level at > $3 million debt. Still ended up with the full $10 million, although this time it did take me until 1865 and I had to put up with an average interest rate of just under 8%. This was even with a very tight start than went into recession in 1857 and stayed there for a few years. Once the economy swung up again things got a lot easier.
The catch is that once you really start making money, which isn't hard with this scenario once you have enough expansion in place, you can save enough in one year to let you pay down a substantial chunk of your debt. It does mean flat-spotting growth for a while, but the pay-off (literally) is that when your credit rating resets to only -2 and the economy is booming, you can take out a pile of bonds at 7% and then top off the full $10 million with a range of 8-10% bonds.
So, I may have to make it harder again. One thing I thought of would be to not wind back the credit rating as much. IOW, I could set it so that you get your full 2 levels back if you never get to $4m debt, and just oscillate between 0 and $3.5m, but if you go into the $4m-$5.5m bracket you still lose another 2 levels on the way up, but only get 1 back on the way down, then if you go into the $6m+ bracket you lose 2 levels on the way up but don't get any back on the way down.
That would make things a tad trickier, because if you go over $6m once you'd have to pay down to $1.5m to get a maximum possible rating of BBB, and if you go up and down more than once your rating would get totally hammered if you let the tracking events tick over while you're refinancing, and you have to let those events tick over to take advantage of any reset.
I reduced the kick-in points to $2m, $4m and $6m. IOW, you can only have $1.5m of debt before the first 2 level reduction in your credit rating. This is much more severe than the original scenario, which only ever dropped it one level at > $3 million debt. Still ended up with the full $10 million, although this time it did take me until 1865 and I had to put up with an average interest rate of just under 8%. This was even with a very tight start than went into recession in 1857 and stayed there for a few years. Once the economy swung up again things got a lot easier.
The catch is that once you really start making money, which isn't hard with this scenario once you have enough expansion in place, you can save enough in one year to let you pay down a substantial chunk of your debt. It does mean flat-spotting growth for a while, but the pay-off (literally) is that when your credit rating resets to only -2 and the economy is booming, you can take out a pile of bonds at 7% and then top off the full $10 million with a range of 8-10% bonds.
So, I may have to make it harder again. One thing I thought of would be to not wind back the credit rating as much. IOW, I could set it so that you get your full 2 levels back if you never get to $4m debt, and just oscillate between 0 and $3.5m, but if you go into the $4m-$5.5m bracket you still lose another 2 levels on the way up, but only get 1 back on the way down, then if you go into the $6m+ bracket you lose 2 levels on the way up but don't get any back on the way down.
That would make things a tad trickier, because if you go over $6m once you'd have to pay down to $1.5m to get a maximum possible rating of BBB, and if you go up and down more than once your rating would get totally hammered if you let the tracking events tick over while you're refinancing, and you have to let those events tick over to take advantage of any reset.