Soft Call Provision

DEFINITION of 'Soft Call Provision'

A feature added to convertible fixed-income and debt securities. The provision dictates that a premium will be paid by the issuer if early redemption occurs.

BREAKING DOWN 'Soft Call Provision'

A sweetener added to increase securities' attractiveness, a soft call provision acts as an added restriction for issuers should they decide to redeem the issue early.

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RELATED FAQS
  1. A corporate bond I own has just been called by the issuer. How can a company legally ...

    Bond issues can contain what is referred to as a call provision, which is a right afforded to the issuing company enabling ... Read Answer >>
  2. Under what circumstances might an issuer redeem a callable bond?

    Understand why an interest rate drop usually compels bond issuers to redeem callable bonds and re-issue them at the new, ... Read Answer >>
  3. What is the difference between redemption of shares and repurchase of shares?

    Sometimes, shares of stock offered by a company are not regular, market-driven common shares. Instead, they may be preferred ... Read Answer >>
  4. Under the Uniform Securities Act, there are anti-fraud provisions that apply to ...

    The correct answer is a. As with other antifraud provisions under the Act, the antifraud provisions apply to all securities ... Read Answer >>
  5. How important is credit rating on a fixed income security?

    Learn how credit ratings for fixed-income securities impact the yield and provide guidance for the amount of risk for the ... Read Answer >>
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    The difference between a regular convertible bond and a reverse convertible bond is the options attached to the bond. While ... Read Answer >>
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