Sentences with phrase «new callable bonds»

When rates drop to 6 %, the company calls the bonds, pays each investor his principal and a small call premium, and then issues new callable bonds with a 6 % interest rate.

Not exact matches

Primarily this would occur when there is a drop in interest rates — issuers often redeem the callable bond and issue another one at the new, lower interest rate.

So if Company XYZ's bonds are callable, and rates fall from 10 % to 3 %, Company XYZ will probably call the 10 % bonds and issue new bonds with a lower coupon.