Put Bond

A put bond is a kind of bond that allows the bond holder to force the bond issuer to repurchase the bond or repurchase the securities at a specific date even before the maturity of the bond or the security. The price at which the bond issuer will repurchase the security is decided on the time of issuance of the bond and it is usually equal to the par value of the bond.

There are a number of options for the bond holders with which they can put these bonds back to the bond issuer. The bond holders can put these bonds back either once in the life time of the bonds or the holder can put these bonds back to the bond issuer on a number different dates that are specified by the holder himself. The special advantage of put bond is that they can be forced to be given back to the issuer however the bond holder has to sacrifice some of its yield. The other name given to the put bond is the multi maturity bond. These types of bonds are also called as option tender bond or the variable rate demand obligation.



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