hard · Corporate Credit Analysis
A distressed investor is evaluating 'exit consents' in a coercive exchange.
If a bondholder participates in the exchange, what is a typical consequence for the bondholders who do not participate?
- They receive a higher coupon to compensate for the higher risk.
- Their existing bonds lose key restrictive covenant protections.
- They are automatically 'crammed down' into the new security.
- Their bonds are immediately accelerated and paid at par.
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