Thread by @tdgraff

We don't know who the Trump companies owe money to exactly, but a few things to consider.

1) There's reporting that Trump owes DB $300mm. Is that secured by something of value? If so, DB probably doesn't have much to lose.

(thread)

2) Other lenders with weak (or no) collateral will be taking more risk. A lender suddenly refusing to roll over debts typically results in bankruptcy.

3) Bankruptcy isn't always the worst thing for a lender. It may very well be that some of Trump's hotels would be worth MORE if under different ownership. Waiting may cause the property value to erode. Seizing the property now may be in the lenders best interest.

4) Real estate lending is usually done at the property level. So some of Trump's properties could go into bankruptcy without doing the same to others. However I'd suspect he's leveraged the heck out of all of them so they will all need to roll over debts at some point.

5) Take the Bedminster golf club that was going to host the PGA. There's nothing wrong with the golf club. If it has a loan against it, good chance that the value of the property divorced from Trump himself is still enough to repay lenders.

If Trump's continued ownership drains the value of the business though, the longer lenders wait the less valuable their collateral becomes. Under normal circumstances, minor covenant violations might be dismissed with a fee or some such. But not now I'd think.

Strictly speaking as a financial analyst, if I were a lender in this case, I'd use whatever leverage I had, esp something like a cov breech, to force Trump to the table. That's the classic playbook for lenders in this kind of case. It isn't just PR. (end)