It's not a solvency problem. The bonds are valued based on when they mature, not what they fetch on the open market.
It is a liquidity issue, which means the money is there, but they can not access the money in the amount of time they need it by.
It is a liquidity issue, which means the money is there, but they can not access the money in the amount of time they need it by.
A 2023 USD is not the same thing as a 2043 USD; those are difference currencies with an exchange rate. (That'd be nice, but we've collectively agreed a little inflation is good.)
Liquidity is a logistical issue.
Solvency is a value issue.
You cannot with a straight face say "It's just a liquidity issue......that lasts many years."
But the customers are startups that have expenses like payroll and AWS. And the climate for raising money is bad, which means a lot of money is being withdrawn every month, and not much new money is getting deposited.
For one thing, people buy companies that are insolvent, eg svb, they don’t buy magic bean farms, eg ftx.
If you need money but your current assets in whatever form can't furnish that fund for you, I am afraid you're broke.
Obviously the latter is not as good as just having money. But it's clearly better than the former.
Therein lies the difference between solvency and liquidity problems.
Whether you have assets that *you* believe you could draw on in the future doesn't matter when your need is immediate.
You say basic fact. I say oversimplification.
We can argue about the semantics of the word "broke", but the difference here is between losing all your money vs. having to take out a loan now that you're pretty much guaranteed to be able to repay when your bonds mature and only losing the interest payments on that loan.