Tesco tender offer

Could someone translate this into simple terms?
i.e. If you had 1K in the 2029 bond, are they offering 1.8% over the market offer price? (mid price is 124.5)

https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/TSCO/13828405.html

Comments

  • They are offering to buy it back at a price that would give an effective yield to redemption 1.8% above the 6% gilt 2028. So you need to do some maths. This gilt has a yield to redemption around 1.47% so adding 1.8% gives 3.27%. Sticking this into a rough calculator gives a price for the tesco bond of around 125 plus some interest.

    As the mid price has jumped from 120 to around 124 this suggest we are in the right ballpark. Fixed income investor is showing a price of 124.49 with a redemption yield of 3.33% so you will likely get a little more than this plus interest
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