hard · Corporate Credit Analysis
A high-yield bond has an 'NC-3' call schedule. The bond has an 8% coupon and was issued 2.5 years ago. The issuer wants to refinance now because market rates have dropped to 5%.
What is the most likely cost to the issuer to retire the bond today?
- The issuer is prohibited from retiring the debt under any circumstances.
- The issuer must pay a 'Make-Whole' premium based on the present value of the remaining coupons.
- The issuer can call the bond at 104% of par.
- The issuer can call the bond at par ($100).
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