Redeemable Bond

A redeemable bond is a type of bond which can be terminated by its issuer before it reaches the end of its bond term if the issuer so chooses. This type of bond is also called a callable bond.

By issuing redeemable bonds, issuers allow for early repayment of loans in the event that exceptional circumstances lead to their having a surplus of available cash at some point throughout the bond term.

Redeemable bonds provide less security to investors than conventional bonds because they do not guarantee fixed coupon payments across the full bond term.

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