Canary Call


DEFINITION of 'Canary Call'

A step-up bond that cannot be called after completing its first-step period. The issuer of the bond reserves the option to call back the bond until the first step is reached. A canary call may only be exercised on predetermined dates.


The canary call is similar to a Bermuda option, as it must be called on specific dates. If the issuer of the bond chooses not to call before the canary call expires, the bond will remain a standard step-up bond, where the coupon rate will increase with each step-up period.

  1. Coupon

    The interest rate stated on a bond when it's issued. The coupon ...
  2. Exercise

    To put into effect the right specified in a contract. In options ...
  3. Call Option

    An agreement that gives an investor the right (but not the obligation) ...
  4. Bermuda Option

    A type of exotic option that can be exercised only on predetermined ...
  5. Step-Up Bond

    A bond that pays an initial coupon rate for the first period, ...
  6. Callable Bond

    A bond that can be redeemed by the issuer prior to its maturity. ...
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