Global FAQ

Know everything about the world

What is soft calling?

September 9, 2022 Chris Normand

A soft call provision requires that the issuer pay bondholders a premium to par if the bond is called early, typically after the hard call protection has passed. Convertible bonds can include both soft and hard call provisions, where the hard call can expire, but the soft provision often has variable terms.

What does a soft call mean?

Depending on their scope and limitations, call protections are often characterized as "hard" or "soft." "Soft call" provisions, which are common in institutional syndicated credits, typically require payment of a one percent premium upon the "refinancing" or "repricing" of the loan within a certain period after closing …

What does hard call mean?

Key Takeaways. Hard call protection, or absolute call protection, is a provision in a callable bond whereby the issuer cannot exercise the call and redeem the bond before the specified date, usually three to five years from the date of issuance.

How does call protection work?

Call protection is a provision of some bonds that prohibits the issuer from buying it back for a specified period of time. Callable bonds may be repurchased by the issuer at full face value. Bonds are typically called when interest rates in the economy at large fall.

What is nc2 call protection?

A typical example of a bond with call protection would be 2 or 3 years of call protection (noted as NC-2 or NC-3), where the borrower is not allowed to prepay. After the end of the call protection period, the bonds do become callable, but the borrower would have to pay a call premium, usually as a % of par value.

What is a 101 soft call?

A form of soft call protection for lenders/investors in securities, designed to mitigate the adverse effects of call risk for investors. 101 soft call protection requires the payment of a 1% premium to the investor, on any early redemption of a callable bond by the borrower/issuer.

See also What words can you make with laundry?

What’s a hard call?

Key Takeaways. Hard call protection, or absolute call protection, is a provision in a callable bond whereby the issuer cannot exercise the call and redeem the bond before the specified date, usually three to five years from the date of issuance.

What are soft calls?

Depending on their scope and limitations, call protections are often characterized as “hard” or “soft.” “Soft call” provisions, which are common in institutional syndicated credits, typically require payment of a one percent premium upon the “refinancing” or “repricing” of the loan within a certain period after closing …

What is soft call?

Depending on their scope and limitations, call protections are often characterized as “hard” or “soft.” “Soft call” provisions, which are common in institutional syndicated credits, typically require payment of a one percent premium upon the “refinancing” or “repricing” of the loan within a certain period after closing …

What does non call 2 mean?

Noncallable security is a financial security that cannot be redeemed early by the issuer except with the payment of a penalty.

What does make whole at 50 mean?

A make whole call is a call option that allows the bond issuer to retire an outstanding bond at a “make whole” price no less than the par value ($100.00). The make whole price, set at the time of the bond issuance, is meant to compensate the bondholders, making them whole, should the issuer retire the bond early.

Leave a Reply Cancel reply