Hello, plutocrats!
In the new update, we’ve significantly expanded the financial system of Plutocracy — bonds are now available in the game!
They can be issued just like shares, bought and sold on the stock exchange and from other characters. We’ve also added new deals with securities holders.
Let me tell you in more detail what new opportunities and manipulations this opens up and what they can be used for.
Companies now have a credit rating that changes dynamically based on several company parameters — its current debt load, investment attractiveness, history of missed payments, and more.
The rating affects bond coupon rates, so maintaining a good rating is critically important if you want access to cheap debt financing.
You can issue bonds if you are the CEO of a company or control it as a shareholder — just like when taking out a bank loan.
But the key difference from bank loans is that bonds are not only a way for a company to borrow money, but also a new investment tool for characters who hold them. When bonds are issued, they are distributed among investors in the game world. Every quarter, all holders of corporate bonds receive a fixed coupon income until the company reaches the bond maturity date.
Among other things, a new bond trading section has been added to the stock exchange, where you can freely buy and sell company debt if its bonds are traded on the market.
Unlike bank loans, you can choose a bond maturity period from 1 to 30 years and set the coupon rate. The lower the rate and the lower the reliability of the company, the less attractive the bonds become and the harder it is to raise a large amount of money from character-investors in the game world.
So before issuing bonds, it’s better to estimate in advance what investor demand for them will look like.
The most interesting part begins when a company can no longer pay coupon income on its bond debt.
Bondholders gain the opportunity to become shareholders of the company that issued the bonds, in proportion to the size of the debt and the company’s remaining assets.
This is a direct way to take control of competitors by buying up their debt and waiting for the first financial problems.
For this purpose, we’ve added a mechanic that allows bondholders to demand repayment of bond debt in company shares in the event of default.
This mechanic works only with bonds, not bank loans.
Perhaps in the future banks will also be added to the list of creditors that can exchange debt for shares in debtor companies. But for now, this is a unique feature of bondholders.
Bonds can be purchased not only on the stock exchange or during the initial offering, but also directly from current holders through negotiations, just like shares, allowing you to bargain for a price that works for you.
We’ve also added the ability to not only buy shares and bonds from characters through negotiations, but to sell them as well!
However, in order to sell any securities to a character, they must either:
already own those securities, or
have an ambition to buy them.
Otherwise, unwanted shares or bonds can still only be sold on the stock exchange.
Our goal was to make debt another full-fledged tool in the struggle for capital and control, just as it is in the financial world.
So now in the game you can:
borrow money in a new way to accelerate company growth;
invest in someone else’s debt for regular income;
trade bonds on the stock exchange;
negotiate their purchase or sale directly with other characters;
speculate on changes in credit ratings;
and in the event of default, turn debt into a stake in the company.
I hope you’ll appreciate the update and find ways to make use of the new tools.
Meanwhile, we continue working on the political update, and I hope that within the next few weeks we’ll be able to share some more good news with you!
Thank you to everyone who supports and appreciates the game!
Until next time!
New:
Corporate bonds
Buying/selling bonds on the stock exchange
New type of deal with characters — selling securities
Company defaults caused by overdue debt and consequences for creditors
Fixes:
Banks now receive the loan principal back on automatic repayment
A CEO can now sell shares purchased by the company before their appointment
Shareholders with a zero stake have been removed from the shareholder list
Holding company: changes to supply priority now apply immediately
The state laws window no longer opens empty
Fixed a crash in the context menu of a bankrupt company
Fixed a crash in the share purchase agreement
Various minor fixes
Currently in development:
Political update. Presidential elections.
Steam Workshop (event and scenario editor, user translations)