#termmax
The maturity mechanism in @TermMax is probably one of the easiest things to overlook.
A fixed-rate position has an actual endpoint.
That sounds obvious, but it changes the way both sides can think about capital.
For the lender, the expected redemption amount and date are defined.
For the borrower, the debt isn't floating indefinitely.
The position has a maturity that becomes part of the economics from the beginning.
I think this matters because financial planning is much easier when at least one variable isn't constantly moving.
Of course, the asset used as collateral can still move sharply.
The secondary market for FT can also change before maturity.
So fixed-rate doesn't mean fixed VALUE throughout the whole period.
It means the contractual maturity economics are defined.
That distinction is important.
When I read through @TermMax , this was one of those details that initially looked simple but became more interesting after thinking about the consequences.
#TermMax @TermMax
$BTW $BR $HEMI
The maturity mechanism in @TermMax is probably one of the easiest things to overlook.
A fixed-rate position has an actual endpoint.
That sounds obvious, but it changes the way both sides can think about capital.
For the lender, the expected redemption amount and date are defined.
For the borrower, the debt isn't floating indefinitely.
The position has a maturity that becomes part of the economics from the beginning.
I think this matters because financial planning is much easier when at least one variable isn't constantly moving.
Of course, the asset used as collateral can still move sharply.
The secondary market for FT can also change before maturity.
So fixed-rate doesn't mean fixed VALUE throughout the whole period.
It means the contractual maturity economics are defined.
That distinction is important.
When I read through @TermMax , this was one of those details that initially looked simple but became more interesting after thinking about the consequences.
#TermMax @TermMax
$BTW $BR $HEMI