medium · Debt Capital Markets
What happens to the price of a bond in the secondary market if a change of control is announced and the company is expected to fail its portability test?
- The price will fall sharply because of the uncertainty regarding the new owner.
- The price will rise to the make-whole premium to reflect the increased risk.
- The price will remain unchanged because the coupon is fixed.
- The price will gravitate toward 101%, especially if it was trading at a deep discount.
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