maintenance and replacement call

(redirected from Maintenance and Replacement Calls)

Maintenance and Replacement Call

In a secured bond, a provision in the indenture that allows the issuer to call the bond (or redeem it before maturity) if it sells or otherwise divests itself of the asset securing the bond. For example, if the collateral on a bond is a factory the issuer owns, a maintenance and replacement call would allow the issuer to call the bond if it sells the factory, or faces foreclosure, or enters into other stated circumstances. It should not be confused with a maintenance call, which has to do with margin accounts.

maintenance and replacement call

A special provision of some bond indentures (especially those of utilities) that permits the borrower to pay off the issue (usually at par) before maturity if the collateral is replaced or disposed of.
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