medium · Debt Capital Markets secondary-trading-liquidity
If an issuer utilizes portability to avoid a 101% put, but the bonds are trading in the secondary market at 105% of par, what is the likely investor reaction?
- The market price drops immediately to 101% so that it matches the price of the put the issuer avoided.
- Investors will be indifferent or pleased, as the bonds are worth more in the market than the put price.
- Investors will litigate to make the portability test fail so that they can still capture the 101% put price.
- Investors will be frustrated because they have lost the chance to put the bonds back at 101%.
Sign up free to see the explanation and track your rank →
More Debt Capital Markets secondary-trading-liquidity practice
- A 'Payment-in-Kind' (PIK) interest feature allows the borrower to do which of the followin
- Which entity is the most common lender for a Revolving Credit Facility?
- What is a 'Borrowing Base' as it relates to certain types of Revolving Credit Facilities?
- How do rating agencies such as S&P or Moody's typically view the issuance of PIK debt?
- Why did 'Term SOFR' rates become available only after a robust SOFR futures market was est
- What is the primary difference between 'Primary' and 'Secondary' debt capital markets?
- Which of the following conditions would most likely favor this strategy?
- Why would an investment bank's trading desk prefer to hold 'on-the-run' Treasuries over 'o