Callable Bond
A bond that can be redeemed by the issuer prior to its maturity. Usually a premium is paid to the bond owner when the bond is called.
Also known as a "redeemable bond". Investopedia Says:
The main cause of a call is a decline in interest rates. If interest rates have declined since a company first issued the bonds, it will likely want to refinance this debt at a lower rate of interest. In this case, company will call its current bonds and reissue them at a lower rate of interest. Related Terms:
Call Premium
Call Provision
Corporate Action
Extraordinary Redemption
Forced Conversion
Indenture
Make Whole Call
Rate Trigger
Refinance
Yield To Call |