Harmless Warrant

AAA

DEFINITION of 'Harmless Warrant'

A warrant that requires the holder to surrender a similar bond when purchasing a new fixed-income instrument. For the warrant to be exercisable, the two bonds must have similar terms, such as maturity, yield and principal.

Also known as a "wedding warrant."

INVESTOPEDIA EXPLAINS 'Harmless Warrant'

Issuing a harmless warrant provides the debt issuer with some call protection. Under a normal warrant, bond holders might all opt to buy more instruments, drastically increasing the firm's level of debt. With a harmless warrant, the original bond must be surrendered at the time of purchase, allowing the level of debt to remain constant.

RELATED TERMS
  1. Wedding Warrant

    A warrant that can only be exercised if the host asset, typically ...
  2. Call Protection

    A protective provision of a callable security prohibiting the ...
  3. Call Warrant

    A financial instrument that gives the holder the right to buy ...
  4. Warrant

    A derivative security that gives the holder the right to purchase ...
  5. Warrant Coverage

    An agreement between a company and its shareholders whereby the ...
  6. Warrant Premium

    The amount that an investor must pay above the current market ...
Related Articles
  1. Will Corporate Debt Drag Your Stock ...
    Investing Basics

    Will Corporate Debt Drag Your Stock ...

  2. Bond Call Features: Don't Get Caught ...
    Bonds & Fixed Income

    Bond Call Features: Don't Get Caught ...

  3. Warrants: A High-Return Investment Tool
    Options & Futures

    Warrants: A High-Return Investment Tool

  4. Advanced Bond Concepts
    Bonds & Fixed Income

    Advanced Bond Concepts

Hot Definitions
  1. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  2. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  3. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  4. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  5. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  6. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
Trading Center