Redeemable Bond

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Redeemable Bond

A bond that the issuer may buy back from investors before maturity. The bond may be called at the discretion of the issuer, within certain limits. When the bond is called, the bondholder receives the par value (or sometimes slightly more) and does not receive any more coupons. Redeemable bonds are issued to allow the issuers to hedge against interest rate risk. That is, if interest rates fall significantly, they can call the bond and issue a new bond at a lower interest rate, reducing their liabilities. However, to protect the bondholder, most redeemable bonds also include call protection, which prevents the bonds from being called for a certain period of time and thereby guarantees the current interest rate for that time. A redeemable bond is also called a callable bond.
References in periodicals archive ?
As part of the new arrangements, the Welsh Government will be able to issue redeemable bonds on the international bond market to institutional investors, governments, traders and individuals.
As with irredeemable bonds, the price of redeemable bonds can fluctuate over time.
The yield of a redeemable bond is also known as the yield to maturity (YTM) or redemption yield.
1 Calculating the internal rates of return for Kite's redeemable bond Time [pounds Discount Present Discount Present sterling] factors at value at factors at value at a discount 8% a discount 10% rate of 8% rate of 10% Year 0 (100) 1.
The yield of a redeemable bond equals the internal rate of return (IRR) of the bond price, the annual interest received and the final redemption amount.
European Capital's investment takes the form of senior term loans, mezzanine debt, redeemable bonds and common equity.
The right to exercise the stock options and the right of bondholders to convert outstanding 3% convertible bonds, as well as the Company's right to early repayment of the redeemable bonds, will resume on August 6, 2003.
European Capital's investment takes the form of senior term debt, senior subordinated debt, redeemable bonds and common equity.
The aggregate face value of redeemable bonds, originally scheduled to be repaid in 1997, is $5,528,000.
To finance mining activities in Venezuela, Unicorn plans to raise between $7 and $9 million (US) through the issuance of common shares and convertible, redeemable bonds using the facilities of the Caracas Stock Exchange.