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<a href="https://www.smartkarma.com/entities/standard-chartered-plc" target="_blank" data-smartkarma-citation="entities:193:1" rel="noopener">Standard Chartered (StanLn)</a> Legacy Tier 1 is on fire. This is in keeping with a mad bid for anything trading below par, including some of our recent favorites such as <a href="https://www.smartkarma.com/entities/yes-bank-ltd" target="_blank" data-smartkarma-citation="entities:767:1" rel="noopener">Yes Bank (YES IN)</a> and the Turkish Bank complex.  However, while other bonds are getting a bid from the incongruous combination of lower-forever interest rates and vaccine now expectations, the rationale for the StanLn Legacy Tier 1 bonds is different. That is correct, it’s different this time. Famous last words?StanLn Legacy Tier 1 instruments are increasingly trading on the expectation of a tender offer. These securities are ineligible as Additional Tier 1 instruments post 2021 and have less than perfect Libor replacement language in their prospectuses. This is raising expectations that investors will be paid to tender their securities.A tender offer, albeit more likely than not, is not a certainty. The potential timing of any offer is also highly uncertain, although higher interest rates negatively impact the value of potential interest rate swap gains in each security. The swap gain argument suggests a tender offer sooner rather than later.We see additional price upside, albeit limited. At the same time, these bonds could underperform materially if not subject to a tender offer within the next 18 months.

Standard Chartered (StanLn) Legacy Tier 1 is on fire. This is in keeping with a mad bid for anything trading below par, including some of our recent favorites such as Yes Bank (YES IN) and the Turkish Bank complex.  However, while other bonds are getting a bid from the incongruous combination of lower-forever interest rates and vaccine now expectations, the rationale for the StanLn Legacy Tier 1 bonds is different. That is correct, it’s different this time. Famous last words?StanLn Legacy Tier 1 instruments are increasingly trading on the expectation of a tender offer. These securities are ineligible as Additional Tier 1 instruments post 2021 and have less than perfect Libor replacement language in their prospectuses. This is raising expectations that investors will be paid to tender their securities.A tender offer, albeit more likely than not, is not a certainty. The potential timing of any offer is also highly uncertain, although higher interest rates negatively impact the value of potential interest rate swap gains in each security. The swap gain argument suggests a tender offer sooner rather than later.We see additional price upside, albeit limited. At the same time, these bonds could underperform materially if not subject to a tender offer within the next 18 months.

Standard Chartered Legacy Tier 1 Is on Fire