Put Bond
Barron's Banking Dictionary:
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Put Bond
Municipal Bond or other bond that has a sell-back provision, or Redemption privilege, allowing holders to sell their holdings back to the issuer at specific intervals up to five years after the original issue date at specific prices determined at the time of issuance. Also known as an option bond, put bonds were first offered in 1980 to encourage reluctant investors to buy long-term bonds. Put bonds frequently are supported by Credit Enhancements.
Investopedia Financial Dictionary:
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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.
Investopedia Says:
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).
Related Links:
Investing in bonds - What are they, and do they belong in your portfolio? Bond Basics Tutorial
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Barron's Banking Dictionary
Dictionary of Banking Terms. Copyright © 2006 by Barron's Educational Series, Inc. All rights reserved.
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