Can retractable bonds be redeemed prior to maturity by the holder?

Asked on by yacel0762

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justaguide | College Teacher | (Level 2) Distinguished Educator

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Bond are debt instruments that are bought by investors from the issuer. The holder of the bond receives the face value of the bond when it matures in addition to coupon payments that are either paid regularly throughout the tenure of the bond or when the bond matures.

Generally, issuers of bonds do not allow holders to redeem the bonds before maturity without having to paying charges to do the same. This ensures the bond issuer has unrestricted access to the funds collected.

Retractable bonds are a category of bonds where the holder is allowed to demand redemption of the bond before the entire tenure has been completed. This feature makes the bonds more attractive as the buyers have access to their entire investment whenever they would like to withdraw it.

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