Module III· DCM — Investment Grade & Senior DebtAdvanced
Question
How does a tender offer work, and what pricing mechanics does the issuer use?
Answer
In a tender offer, the issuer offers to buy back outstanding bonds from investors. Pricing can be fixed price or spread-based, often benchmark yield plus tender spread. The issuer may set a cap, priority levels, early tender premium, and settlement date. Tender offers are used to retire debt, manage maturities, or refinance.