UnThreaded | Threaded | Whole Thread (11) | Ignore Thread Prev | Next
Author: joelcorley Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35379  
Subject: Re: Union Carbide (DOW) 7.75 of '96 Tender Offer Date: 3/3/2011 11:32 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
brewer12345,

You wrote, Joel, this sort of tender is easy to understand if you are a bond pro and have access to a Bloomberg terminal, and pretty opaque for everyone else. What they are offering is to buy back some bonds based on a yield spread to a reference security, in this case a 2040 treasury. Since I have a bloomberg terminal, I plopped down for 30 seconds and got you the range of tender dollar prices based on the two spreads. 290BPs is equal to a dollar price of 103.07. 260BPs is equal to a dollar price of 107.35. So add 3 points to those prices if you get your response in by the deadline and the firm is offering to repurhase the bonds between 106.07 and 110.35. Note that the offer is only to repurchase a portion of the outstanding debt, so you might get a partial redemption if you choose to play alond.

Thanks for the info. I certainly don't have a Bloomberg terminal - I'd imagine that my investments would need to be in the millions to make that worthwhile, yes? I'm not there yet. Indeed, my retirement target is only a little into the 7-figure range and not all of that is going to be in bonds.

I suppose I should have worked out that the yield spread was applied to the effective yield of the reference security and that I'd have to work backwards to calculate an effective offer price.

A price of 106.7 probably might not be enough to get me to play along; 110.35 would. I thought this was mostly behind me. Now I'll probably have to actually do something with this.

I assume if I respond to the tender, I have to submit a price as a basis point spread over the reference security? I suppose that's not too bad really - I guess I just need to figure out at what spread from a 30 year T-Bill is sufficient...

BTW, if anyone wants to actually read the Offer to Purchase, I've posted a copy here: https://docs.google.com/viewer?a=v&pid=explorer&chro...

- Joel
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (11) | Ignore Thread Prev | Next

Announcements

Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Managing Your Wealth
Our own TMFHockeypop from Rule Your Retirement fame on the TV show Managing Your Wealth.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Value Hounds

My Big Fat Greek Splat
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement