European callable bond

Definition

A bond that can be called, or purchased, by the issuer before the bond has reached maturity. The issuer usually has to pay a premium to purchase the bond before it reaches maturity. Issuers will call a bond if interest rates have decreased. Therefore, the callable bond has an interest rate risk to the bondholder. Unlike the American callable bond which can be called at any time, the European callable bond can only be called on a preset date. Also called redeemable bond.
Browse Definitions by Letter: # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
European best bid and offer (EBBO) European Central Bank