hard · Private Credit & Debt loan-structures-instruments
A borrower chooses to pay down its high-yield bond early. The bond has a 'make-whole' call provision at T + 50 bps.
If the remaining cash flows (coupons plus principal) have a present value of $1,150,000 when discounted at the comparable Treasury yield plus 50 bps, and the face value is $1,000,000, what must the borrower pay to retire the debt?
- $1,050,000
- $1,200,000
- $1,000,000
- $1,150,000
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