what is the risk of not accepting bond tender offer?
I have a corporate bond that has gradually declined to JUNK status. The issuing company is now offering to buy it back at about 50% of it's value. The company has not filed for bankruptcy. The bond comes due in 2013. What are the risks associated with holding onto this bond?
Bond best answer:
Answer by financegal27
The risk is that they default on the bond. They typically present a tender offer because they are trying to shore up their balance sheet to avoid violating the bond covenants and being forced into bankruptcy. I would review the covenants and their financial statements to see how bad the situation is and then make a decision. The risk you take is a pure default on the bond.
Bond
PJ Bond @ Fest 11 10.27.12-33
Image by elawgrrl
PJ Bond plays Fest 11 at Civic Media Center, Gainesville, FL, October 27, 2012.
Note: Please share, download and use these photos for non-commercial purposes but be sure to abide by the creative commons license by crediting the photos to Nicole Kibert / www.elawgrrl.com and if using online, add a link back to this page or to www.elawgrrl.com. This license does not permit commercial use. Thanks.
Orignal From: what is the risk of not accepting bond tender offer? and PJ Bond @ Fest 11 10.27.12-33
No comments:
Post a Comment