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Glossary

Grace period

A grace period (in a broad sense) is a preferential period for crediting, in which no interest is charged for using funds.

As applied to the bond market, the grace period is the period after the occurrence of a technical default, within which the issuer can pay the amount owed on the coupon, execute the call or repay the principal amount of the debt. If the issuer manages to fulfill its obligations, then the technical default does not go into the default status. However, if prior to the end of the grace period the issuer was unable to make the payment, a default occurs. During the grace period, investors and creditors cannot file claims to initiate bankruptcy procedure for the issuer.

The grace period is expressed in days after the default of the issuer; it’s indicated in the issue documents, but it can also be fixed by law (for example, no more than 10 days, unless another period is indicated in the issue prospectus).

Information on debt servicing, the length of the grace period for specific issues can be viewed on the bonds page in the "Debt servicing" block. An example of a security for which a technical default occurred, but did not go into default status, since the issuer managed to pay off the debt during the grace period: https://cbonds.com/bonds/660061/
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