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."

BREAKING DOWN '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.

  1. Wedding Warrant

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

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  3. Covered Warrant

    A type of warrant that allows the holder to buy or sell a specific ...
  4. Warrant Premium

    The amount that an investor must pay above the current market ...
  5. Put Warrant

    A put warrant is a type of security that gives the holder the ...
  6. Naked Warrant

    A warrant that is issued without a host bond. A naked warrant ...
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  1. Are warrants more desirable than options?

    Understand what stock warrants are, the differences between warrants and options, and learn whether warrants or options are ... Read Answer >>
  2. How are stock warrants different from stock options?

    Stock option and stock warrant may have similar function. However, company uses these two financial instruments for different ... Read Answer >>
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