make-whole call provision

Make Whole Call Provision

A provision in some bond agreements allowing the issuer to redeem the bond before maturity if it gives bondholders a lump-sum payment equal to the net present value of coupons they would have received, had the bond not been called. A make-whole call provision allows the issuer to reduce the amount of debt on its balance sheet, if need be, while also limiting bondholders' risk.

make-whole call provision

A stipulation in a bond indenture that permits the borrower to redeem a bond prior to maturity by making a lump-sum payment equal to the present value of future interest payments that will not be paid because of the early call. The provision makes the bondholder whole by providing compensation for interest payments that are missed because of an early redemption.
References in periodicals archive ?
The innovative characteristic of a make-whole call provision is that the call price floats inversely with risk-free rates.
Thus, a make-whole call provision improves a firm's financial flexibility by capping the price of a successful bond tender offer.
2) Thus, compared to a fixed-price call provision, up-front costs for a make-whole call provision should be lower.
While it is difficult to quantify the ex post flexibility benefits of a make-whole call provision, quantifying the ex ante cost is feasible.
75 percent and contain a make-whole call provision at Treasurys plus 15 basis points.
However, use of this make-whole call provision remains highly unlikely, since such a call would cost the qualified investment issuer a premium of approximately 130% over current par value.
The debt has a bullet maturity with a make-whole call provision, and ranks pari passu with other unsecured and unsubordinated indebtedness of the company.
However, use of this make-whole call provision remains highly unlikely since such a call would cost the qualified investment issuer a premium approximately 130-140% over current par value.
794 percent and carry a make-whole call provision with a five basis-points premium.
The notes will only be redeemable, in whole or in part, at the option of GPC through the make-whole call provision.
The notes will be redeemable, in whole or in part, at the option of GPC through the make-whole call provision.
The new notes mature in 2017 and carry a no call provision for five years with a make-whole call provision exercisable any time prior to the stated call dates.