101 call protection: Difference between revisions
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''Security investment''. | ''Security investment''. | ||
A form of soft call protection for lenders/investors in securities, designed to mitigate the adverse effects of ''call risk'' for investors. | 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. | |||
At early redemption the premium becomes payable, together with principal and outstanding interest at the call/redemption date. | At early redemption the premium becomes payable, together with principal and outstanding interest at the call/redemption date. | ||
Latest revision as of 15:13, 4 December 2015
Security investment.
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.
At early redemption the premium becomes payable, together with principal and outstanding interest at the call/redemption date.
The premium sometimes applies only for an early part - for example just the first year - of the life of a security (the security becoming freely callable after that initial period of 101 call protection).
