Debt

(Most of the technical information on this page comes from the following forum post by Blues . Thanks Blues! )

# Sources of Debt

## Fougamer

As time ticks by, the starting debt for founding early goes down. This will eventually turn into *starting money* if it takes a long enough amount of time for the last 2 players to found. Once there is only one player left who hasn't founded their HQ, the values stop changing and that player no longer gains from waiting to found.
Inversely, as the debt amount goes down, the stock price a player starts with goes up. On standard difficulty (Manager), debt impacts stock price 5 fold.
Lastly, bond rating is shown. This affects the interest payed on debt, think of debt as a loan. The more debt one has, the higher the interest rate; making it harder to pay off debt later on.

## Auto-Purchasing Life Support, Fuel, and Power

* There is also a gameplay setting which enables auto-supply on every building. The money for buying anything beyond the requirements above comes from your stockpile of cash; it is not purchased as debt.

## "Winning" Auctions

* Auctions occur at 12:00 every Sol
* Consider the risk vs. reward in terms of stock price. If a player spends $40k in debt on a new claim, their Total Value goes down $200k from the added debt. This results in a $2 drop in their share price. Meaning, it will cost at least $12,000 less cash from someone else to Buyout that player.

# Bond Rating

At 0:00 every Sol, interest is accrued on a player's Debt. This interest is added to the debt total and does not come from a player's cash stockpile. The amount of interest accrued is based on the player's bond rating.

A player with a D bond rating is locked out of buying any Black Market effects other than Bribe a Claim and Cook the Books.

## Rating Formula

Bond Rating is based on the ratio of a player's Debt (with the multiplier) to their Total Value rather than a fixed amount of debt. The listed ratios are the highest ratios you can have while maintaining that bond rating. For example, if you have a 3.1% ratio of debt to total value in a 4-player game, you will have a AA rating.

# Managing Debt, Is it worth it?

### Accounting for interest

For simplicity's sake, let's say you're paying debt down immediately before an interest tick (@ 0:00) and this one day of interest is all you're considering.

If you're still stuck in D debt after paying down as much debt as possible, every $100,000 of debt paid will keep your stock price $7.80 ($6.00\*1.3) above where it would've been with the interest applied. You must own at least seven stocks in yourself for this to be worthwhile. If you manage to pay down exactly enough debt to get to a C rating, assuming a 2.5m asset value (which would be roughly accurate for the late game in a 4-player match), you'd be saving $1.875 in stock value from avoiding the higher interest rate alone (difference of 10% interest on 250k debt, with no offsetting cash cost). The break even point will depend on how much debt you had to pay to get back to the C rating. For example, if you paid $100,000, you would gain $9.675 in stock value. Assuming again that your income is equal to your opponent's, you'd need at least six stock in yourself to take an advantage from paying this amount of debt.
Any further debt payment would have smaller returns, as the avoided interest is lower and moving up bond ratings both has smaller effects on interest rates and affects a smaller amount of debt.

So based on this analysis alone, the go-to panic move of paying down all debt when in trouble may be costly. That said, the common rule of thumb to only pay down debt if you own all your stock seems too conservative.

### Other considerations

* Paying down enough debt to get out of D levels of debt also gives you access to the Black Market again. While the Black Market is generally very expensive late-game and thus of questionable value, it is still a powerful and possibly pivotal tool, especially with how strong Offworld Markets get in the late-game.
* The game may last for more than one interest tick, in which case paying down debt sooner reduces your principal and prevents the extra interest from compounding.
* In situations with more than one opponent, paying down debt not only makes you more expensive to buy, but also makes you less of an immediate threat since you lose the purchasing power of the cash. This may not save you if there are still compelling reasons to target you first, but you might combine this with stock sells or something similar to get someone to switch targets. Surviving longer doesn't necessarily give you a significantly greater chance of winning, though.
* All those estimates were done assuming equal future income. If you have reason to believe you're earning more than your (single) opponent, there's no reason to treat a dollar spent by you as equal to an extra dollar he'd need.
* All that said, the cash used to pay debt (or buy stock to increase your stock price) obviously comes with an opportunity cost. Funneling all that cash into hacks or using some means to invest that cash into making greater future income can be more effective. Finishing a buy on another player is typically the most important reason to avoid paying debt because delaying that buy encourages your target to sabotage you and make themselves more expensive, and means you're losing out on potential subsidiary income.
* Because paying debt raises your base stock price, any opponents who own stock in you will also have increased stock prices due to the stock owned modifier's value increasing.