medium · Debt Capital Markets secondary-trading-liquidity
Portability is often described as 'giving the sponsor an exit'.
How does this impact the secondary market trading of the bonds when a sale is rumored?
- The bonds will always trade at par if portability is met.
- The bid-ask spread will widen to 500 bps automatically.
- The bonds will trade down to 90% because of the new owner risk.
- The bonds may trade above 101% if investors expect the portability test to fail.
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