DEFINITION of 'Detachable Warrant'
A derivative that is attached to a security and gives the holder the right to purchase an underlying security at a specific price within a certain time frame. A detachable warrant is often combined with various forms of debt offerings and can be removed by the holder and sold in the secondary market separately.
BREAKING DOWN 'Detachable Warrant'
Many companies choose detachable warrants when issuing bonds because it makes a debt offering more attractive and can be an effective method of raising new capital. The exposure to the right given by the detachable warrant can often gain the attention of investors who do not usually participate in the fixed-income markets.
A detachable warrant can be traded independently of the package with which it was offered, and is similar to a call option.