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 ?
* A competitive market price compression perceived against trucking cost improvements
Total Q2 Pharmacy Services segment revenues increased 4.2% for the three months ended June 30 compared to the prior year primarily due to brand name drug price inflation as well as increased total pharmacy claims volume, partially offset by continued price compression and an increased generic dispensing rate.
The quasi sovereign nature of the issuer and the Guarantee from the Government of Sri Lanka allowed Srilankan Airlines to accomplish significant price compression and attain a diversified orderbook with participation from 93 accounts.
Bartletts and Anjous also saw year-over-year price compression but have held relatively well since December.
Price compression will continue to shape the retail grocery industry.
The in creases were primarily due to the Aetna acquisition, partially offset by reimbursement pressure and the investment of a portion of the savings from tax reform in wages and benefits in the Retail/LTC segment and continued price compression in the Pharmacy Services segment.
After a prolonged period of price compression, housing markets have started to stabilise in most of the major markets.
The issue has been oversubscribed by 3x times and managed to achieve a very strong price compression. The successful completion of the deal underscores investor's confidence in IRFC."
Consolidated operating profit in the quarter fell 11.5% to $2.5 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.
How does this price compression manifest in advisory firms?
"Programs like this will only add to the price compression on advisory business in our industry," the recruiter added.
Despite price compression in the upper luxury market in New York, the demand for housing in the city is very strong.