Make whole provision

Make whole provision

Related to the lump-sum payments made when a loan or bond is called, equal to the NPV of future loan or coupon payments not paid because of the call. The payment can be significant and negate the attractiveness of a call.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved