A provision in a
bond or other
fixed income security allowing the
issuer to
redeem the security before
maturity. When a doomsday call is exercised,
bondholders are paid a fixed amount, either the
par value or a certain percentage depending on the nature of the provision. Bond issuers include doomsday calls in some agreements to
hedge against
interest rate risk. That is, if interest rates lower significantly, they can exercise the doomsday call and issue a new bond at a lower interest rate. Informally, they are known as Canada calls, as they are relatively common on Canadian
corporate bonds. See also:
Callable bond.