Price compression

Price compression

The limitation of the price appreciation potential for a callable bond in a declining interest rate environment, based on the expectation that the bond will be redeemed at the call price.

Price Compression

The downward pressure on a callable bond's price appreciation during a period of declining interest rates. Declining interest rates normally raise a bond's price because interest rates are usually fixed at issue; buying such a bond will entitle the buyer to a higher interest rate than he/she would otherwise be able to receive when rates are declining. Callable bonds also rise in price, but price compression means that they do not rise as much because of the risk that the issuer will call the bond and simply repay the principal, depriving the bondholder of future interest.
References in periodicals archive ?
The issue has been oversubscribed by 3x times and managed to achieve a very strong price compression.
5 billion, mostly because of restricted networks excluding CVS Pharmacy, reimbursement pressure in the retail/LTC segment, price compression in the pharmacy services segment, and the timing of Medicare Part D profits between the third and fourth quarters of this year, CVS said.
33 billion, driven mainly by higher pharmacy network claims, branded drug price inflation and growth in specialty pharmacy volume, partially offset by higher generic dispensing levels and generic price compression.
Despite price compression in the upper luxury market in New York, the demand for housing in the city is very strong.
These increases result from a variety of factors including increased construction activity, easing of general contractor price compression, and the availability of labor and sub-trades.
Among the world's top 10 languages, English into Russian showed the most price compression over that period.
Categories with the largest price compression include fresh eggs (-24 percent), milk (-19 percent), cheese (-10 percent), diet aids (-9 percent), baby needs (-8 percent), fresh produce (-7 percent), and shortening and oil (-6 percent).
It's an important development in terms of price compression, infrastructure, ongoing regulation and the cost of moving money.
The decline in revenue growth in the mid-range and high-end sectors was explained by IDC as resulting from a decrease in unit shipments and also continuing price compression of those units.
And I never thought I would avoid sorting, but price compression [among grades] made me change my mind.
Price compression (through such leveraging methods as volume-driven discounts, the RBRVS, and capitation.