Glossary

Retractable Bond

Is a bond which is payable at par to its holder on demand once the lock-out or deferment period expires. This bond combines a bond with a put option allowing the holder the right to early redeem the principal on the bond. The put feature establishes a floor on the bond price, regardless of the increase in interest rates before maturity. However, the bond’s cash flows are identical to a normal bond. Therefore, in order to price a retractable bond, it is necessary to first determine the value of the underlying debt as normal debt using the discounted cash flow approach. Then, the put feature is measured as the benefit of holding or exercising the embedded option using an option pricing model, based on the value of the debt at different option valuation dates over the bond’s time to maturity. It follows that the value of a retractable bond is equal to its cash flows plus the value of the put feature.
This bond is also known as puttable bond, put bond, or putable bond.
Share:
minimizeexpand
150 000
issues: local and international bonds
170
countries
+7 812 336 97 21
pro@cbonds.info
150 000
issues: local and international bonds
170
countries
Сbonds is a global Fixed income data platform
+7 812 336 97 21
pro@cbonds.info
Data
  • Descriptive data on bonds
  • Bond Quotes from trading systems and market participants
  • Prospectuses and other issue documents
  • Credit ratings
  • Indices and indicators
  • Market news and analytical research
Analytical instruments
  • Multi-parameter bond database search
  • Bond Maps
  • Market calendar
  • Bond calculator
  • Watchlist and Portfolio management
  • Chart analysis
  • Mobile App and Excel Add-in Tool
Enter or RegisterSubscription/Trial access