Put Bond

DEFINITION of 'Put Bond'

A bond that allows the holder to force the issuer to repurchase the security at specified dates before maturity. The repurchase price is set at the time of issue, and is usually par value.

BREAKING DOWN 'Put Bond'

Bondholders have the option of putting bonds back to the issuer either once during the lifetime of the bond (known as a one-time put bond), or on a number of different dates. Of course, the special advantages of put bonds mean that some yield must be sacrificed.

This type of bond is also known as a multimaturity bond, an option tender bond, a variable rate demand obligation (VRDO).

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