What is Call Protection?
Call protection refers to provisions that are contained in the terms of agreement associated with a callable bond. Essentially, call protection refers to the period of time in which the debtor cannot exercise the privilege of calling for an early redemption of the security from the investor. In some cases, call protection also outlines the rights and privileges of the bond or holder, and how they relate to the conditions that must exist in order for the security to be redeemed before the maturity date. Callable bonds are constructed to allow the issuer of the loan or bond to call for the redemption of the security. In order to ensure that the investor who chooses to purchase the bond can anticipate a reasonable return on his or her investment, terms and conditions are included that spell out how and when the debtor can call for redemption. Generally, this includes specifying a period of time that must pass before the debtor can entertain the possibility of calling the bond. For example
” Call protection refers to provisions that are contained in the terms of agreement associated with a callable bond. Essentially, call protection refers to the period of time in which the debtor cannot exercise the privilege of calling for an early redemption of the security from the investor. In some cases, call protection also outlines the rights and privileges of the bond or holder, and how they relate to the conditions that must exist in order for the security to be redeemed before the maturity date. . Callable bonds are constructed to allow the issuer of the loan or bond to call for the redemption of the security.
