Canary Call

In finance, the term canary call refers to a clause which may be included in step-up bonds which gives the bondholder the right to terminate the bond within one or more of the sub-term which make up the full bond term. If the bond is not cancelled within that time frame, its bearer must continue to hold it until it matures.

Example: A municipality issues a bond with an 8 year term which pays out coupons at the rate of 1% interest per annum during the first 4 years and at the rate of 3% interest per annum during the second 4 years. The bond includes a canary call clause which allows bondholders to terminate it within the initial 4-year term during which the lower interest rate applies. Bondholders who do not terminate the bond within the first 4 years must keep the bond for the full 8-year term.

More on this topic:
Swiss online trading comparison

About moneyland.ch

moneyland.ch is Switzerland’s independent online comparison service covering banking, insurance and telecom. More than 80 unbiased comparison tools and calculators are available on moneyland.ch, along with useful financial guides and timely news. The comprehensive comparison tools help you to find the right insurance policies, bank accounts, credit and prepaid cards, loans, mortgages, trading accounts and telecom products for your needs.