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I received an early tender notice for a bond I hold:

Terms: $815.00 per $1000 P.A. plus int.

In addition, holders who tender their notes prior or on 08/25/16 (The Early Tender Date) are eligible to receive an Early Tender Premium of $30 per $1000 P.A. ($815.00 + $30 = $845.00).

If I sell the bond during this early tender offer I'll receive $845.00. But the current market value of the bond is $850.25. What is the benefit of this early tender offer? If I wanted to sell my bond today, why would I not just sell it directly and take the $850.25? Does an early tender signal a lower value for the bond in the future? I don't understand the benefit of this early tender offer.

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  • Does 850.25 represent the present value of the value of the bond at maturity? Or is the price you will receive if you sold the bond now? If that is the current selling price, how much would you net after fees? If you accept the tender offer, how much do you net after fees? Compare the two based on net money received at the same point in time. Simplest to understand is how much do I get with each option today.
    – Xalorous
    Commented Aug 19, 2016 at 13:18
  • @Xalorous $850.25 is the current value if I were to sell it now. I'm assuming the fees would be equal either way. I don't plan on selling the bond. Was going to wait until maturity. I just don't understand/see the benefit of the early tender offer. Why would anyone accept this offer? Commented Aug 19, 2016 at 16:01

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