Callable Bond
A bond that can be redeemed by the issuer prior to its maturity. Usually a premium is paid to the bond owner when the bond is called. Also known as a "redeemable bond".
Investopedia Commentary
The main cause of a call is a decline in interest rates. If interest rates have declined since a company first issued the bonds, it will likely want to refinance this debt at a lower rate of interest. The company will call its current bonds and reissue them at a lower rate of interest.
Related Links
Advanced Bond Concepts
Bond Basics Tutorial
Call Features: Don't Get Caught Off Guard
See also: Call Premium, Conversion, Extraordinary Redemption, Forced Conversion, Indenture, Make Whole Call, Refinance, Yield to Call
Also spelled: call bond
callable bond