DEFINITION of 'Multi-Callable Bond'

A bond that allows the issuer to call or redeem it on particular future dates that are specified at the time of issuance. Since the issuer benefits by gaining flexibility with regard to the bond's maturity, the coupon on the bond may be higher than the prevailing market interest rate.

BREAKING DOWN 'Multi-Callable Bond'

Multi-callable bonds or notes are generally of two types - step-up notes or accrual notes. In multi-callable step-up notes, the coupon increases if the notes are not called by the issuer, while in accrual notes, the interest rate remains unchanged and accrues at a constant rate.

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RELATED FAQS
  1. How does a bond's coupon interest rate affect its price?

    Find out why the difference between the coupon interest rate on a bond and prevailing market interest rates has a large impact ... Read Answer >>
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    A callable bond provides the issuer (borrowing entity) with an option to redeem the bond before its original maturity date. ... Read Answer >>
  3. Under what circumstances might an issuer redeem a callable bond?

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