first call date
First call date
A date stated in an indenture that is the first date on which the issuer may redeem a bond either partially or completely.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
First Call Date
The first date on which a callable bond or other fixed income security may be called. A callable bond allows the issuer to redeem the bond before maturity. When the bond is called, the bondholder receives the par value and does not receive any more coupons. Callable bonds are issued to allow the issuers to hedge against interest rate risk. That is, if interest rates lower 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 callable bonds also include a first call date, which guarantees the current interest rate for a certain period of time. The first call date is included in the bond agreement. See also: Doomsday call, Yield to first.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
first call date
The earliest date on which a security may be redeemed by the issuer. This date is particularly important to an investor who holds a security that is selling above or near its call price. The first call date is likely to be either five years or ten years after the date of issue; however, the timing varies by bond issue. Information regarding the first call date may be found on the bond certificate or it may be obtained from the brokerage firm holding the security. Bonds selling at a premium are often quoted at the yield to first call. See also yield to call.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.