Pricing vs. Market Yield
The cash‑tender documents show that First Quantum is offering to repurchase the 6.875 % senior notes due 2027 at 101 % of par (plus accrued interest). At a 101 % tender price the implied yield on the notes works out to roughly 6.5 %–6.6 % (6.875 % coupon × 100/101). By contrast, the secondary‑market price of the same issue is trading around 99 % of par, which translates to a yield of ≈7.2 %–7.3 % (the same coupon divided by a price below par). In other words, the tender is priced ≈60–80 basis points below the prevailing market yield for this credit‑quality, 2027‑maturity senior unsecured debt.
Trading Implications
Because the tender price offers a materially lower yield than the market, the buy‑back is attractive for holders who wish to lock in a higher‑than‑market return and reduce exposure to First Quantum’s credit risk. For investors who are neutral on the credit but need liquidity, the tender provides a premium to the current market price, so participation is generally advisable. Conversely, if you are a short‑term trader looking to capture the spread, you could consider selling the notes in the open market and buying them back through the tender (subject to tender‑size limits and eligibility), effectively realizing a ~60 bp “carry” benefit. Keep an eye on the tender’s cut‑off date and any potential “over‑allotment” provisions that could affect the amount you can sell back. If the tender were to be priced at or below par (e.g., 98 %), the implied yield would rise to ~7.5 %—still roughly in line with market—making the offer less compelling and likely resulting in limited participation.