easy · Debt Capital Markets
If an issuer decides *not* to call a bond on the first call date even though it is economically beneficial to do so, what might happen to the bond's spread in the secondary market?
- The spread will immediately tighten to zero.
- The bond's price will rise significantly.
- The bond will be automatically upgraded by rating agencies.
- The spread will likely widen as investors perceive a 'non-call risk'.
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