hard · Debt Capital Markets credit-ratings-risk
A corporate treasurer manages a 'Maturity Wall' where $500 million of debt matures in 12 months.
Why might the treasurer choose to execute a 'Tender Offer' alongside a new 10-year bond issue today?
- To 'term out' the debt maturity profile and reduce refinancing risk by replacing near-term debt with long-term debt.
- To avoid paying the coupon on the new 10-year bond for the first year.
- To increase the company's total indebtedness and cash on hand.
- To trigger an automatic credit rating upgrade from the major agencies.
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