Soft Call Protection

If a bond issue has soft call protection, that provision of the bond goes into effect after the hard call protection has passed. Soft call protection is usually a premium to par - a value higher than the face or maturity value - which the issuer must pay to call in the bonds before maturity. For example, when the first call date is reached, the issuer may have to pay a 3 percent premium to call the bonds for the next year, a 2 percent premium the following year and a 1 percent premium if the bonds are called more than two years after the hard call expires. Soft call protection does not stop a bond from being called in, but it does pay the investor a premium to the face value.