From the course: Applied Fixed Income

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Make-whole call

Make-whole call

From the course: Applied Fixed Income

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Make-whole call

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- [Instructor] On this screen, you'll see a bond that was issued by T-Mobile, a cellular company in the U.S. It was brought to the market in April, 2020 as part of T-Mobile's $19 billion multi-tranche bond raising to finance its $66 billion purchase of their U.S. rival, Sprint. The bond was issued under Reg S 144A, and I've pulled up the 144A tranche on Bloomberg here. It's a 10-year note, but it has a 9.75 year make-whole call, and that's almost all of the term that this bond is outstanding. Additionally, the final three months of the bond has a call such that the issuer is not necessarily faced with a large refinance risk. The terms and conditions for both these calls are contained in the bond raising terms. They're also on the Bloomberg, and I've included a screenshot of the call schedule. Let's talk about the first type of call on this bond, and that's a make-whole call. Mechanically speaking, a make-whole call can be thought of the same as a normal call. A make-whole call…

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