No. of Recommendations: 7
I'm kind of suprised that the difference between a $100 million dollar bond and a $500 million dollar bond is "only" $4 to $12 million dollars, especially for someone with his dodgy financials and track record of incurring more avoidable expenses by shooting off his mouth and worsening his financial picture seemingly by the day.
Well, that's just the premium side. The fee for the bond is typically 1-3% of the face of the bond.
The collateral side would have its own issues. Even if we assume, arguendo, that Trump (or the Trump Org.) has a net worth of several billion dollars, the bulk of it will be in real estate. And nearly all of that real estate will be complicated - there will be mortgage-holders and minority participants and equity partners and leaseholds and a whole host of arrangements that will make it complex for Trump to pledge his equity in those properties to a bonding company, and for the bonding company to get comfortable that in the event Trump loses the appeal and they had to stand behind the bond that they could liquidate the equity into cash.
Competent lawyers can do the due diligence and paper all that, given sufficient time. Their legal team should have been working on that for months now. But there's a cost to doing that as well, and the bonding company is going to discount the collateral based on the risk and brain damage of collecting.
So the $100 million may also be trying to limit this to the portion of his assets that's "easy" to encumber for a bonding company - cash and securities and any assets that he might own in a less complicated structure (ie. little but a mortgage). Stuff that he owns minority stakes in, or that's subject to complicated partnership and other equity structures, might be more difficult to use as collateral.
