extraordinary redemption

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Extraordinary Redemption

A situation in which a bond issuer redeems a bond before its maturity because the revenue source paying the coupons disappears. For example, suppose a callable bond is issued to build a factory, and the revenue from the factory pays the interest on the bond. If the factory burns down, the company may redeem the bond at par so it no longer has to make interest payments. While the above example is catastrophic, most extraordinary redemptions occur for more mundane reasons; for instance, a mortgage-backed security may be extraordinarily redeemed if too many mortgages are refinanced. An extraordinary redemption is also called a special call.

extraordinary redemption

References in periodicals archive ?
Upon an event of default under the trust indenture, extraordinary redemptions of all bonds will occur on a pro rata basis.
The senior and subordinated notes are subject to optional, mandatory and extraordinary redemptions.
mechanism for extraordinary redemptions of any bonds.

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