The call date is the date on which a bond can be redeemed before maturity. If the issuer feels there is a benefit to refinancing the issue, the bond may be redeemed on the call date at par or at a small premium to par.


A bondholder expects to receive interest payments on his or her bond until the maturity date, at which point the face value of the bond is repaid. The coupons paid represent interest income to the investor. However, there are some bonds that are callable as outlined in the trust indenture at the time of issuance. Issuers of callable bonds have the right to redeem the bonds prior to their maturity dates, especially during times when interest rates in the markets decrease. When interest rates decrease, borrowers or issuers have an opportunity to refinance the terms of the bond coupon rate at a lower interest rate, thereby, reducing their cost of borrowing. When bonds are “called” before they mature, interest will no longer be paid to the investors.

To protect bondholders from an early call by issuers, the trust indenture will typically highlight a call protection period. The call protection is a period of time within which a bond cannot be redeemed. For example, a bond issued with 20 years to maturity may have a call protection period of seven years. This means that for the first seven years of the bond’s existence, regardless of how interest rates move in the economy, the bond issuer cannot buy back the bonds from holders. The lockout period provides investors some protection as they are guaranteed interest payments on the bond for at least seven years, after which interest income is not guaranteed.

The trust indenture also lists the date(s) a bond can be called early after the call protection period ends. This date is referred to as the call date. There could be one or multiple call dates over the life of the bond. The call date that immediately follows the end of the call protection is called the first call date. The series of call dates is known as a call schedule and for each of the call dates, a particular redemption value is specified. An issuer may redeem its existing bonds on the call date if interest rates are favorable. If rates and yields rise high enough, issuers will likely choose to not call their bonds until a later call date or simply wait until the maturity date to refinance.

A bond issuer can only exercise its option of redeeming the bonds early on specified call dates. To compensate bondholders for early redemption, a premium above the face value is paid to the investors. Because call provisions place investors at a disadvantage, bonds with call provisions tend to be worth less than comparable noncallable bonds. Therefore, in order to entice investors to buy callable bonds, issuing companies must offer higher coupon rates on callable bonds.

Investors who depend on the interest income generated from bonds must be aware of the call date when buying a bond.