callable non refundable bonds

deepakkrkanodia
Finance Junkie
Posts: 49
Joined: Thu Aug 09, 2012 4:45 pm

callable non refundable bonds

Postby deepakkrkanodia » Mon Sep 03, 2012 8:55 pm

sir

plz tell me with practicle example on callable non refundable bonds
as could not understand it?

regards

deepak kanodia

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akshat
Good Student
Posts: 10
Joined: Wed Aug 22, 2012 11:53 am

Re: callable non refundable bonds

Postby akshat » Thu Sep 06, 2012 1:00 pm

Callable bonds can be called back by the issuing company when the interest rates fall and you can raise debt cheaper from the market than continue with these bonds for which you pay higher interest!

So, say Reliance issues callable bonds for constructing the Metro in Mumbai, it has the right to call them back when it feels it can raise cheaper debt elsewhere. Say now some Japanese Development Bank (JDB) provides cheaper loan to them as per the relationship with the Indian Govt. then Reliance can call back the earlier debt and get the money from JDB instead.

Of course, the investors would expect higher coupons on such a bond as there is uncertainty associated with them.

deepakkrkanodia
Finance Junkie
Posts: 49
Joined: Thu Aug 09, 2012 4:45 pm

Re: callable non refundable bonds

Postby deepakkrkanodia » Fri Sep 07, 2012 11:55 am

mr akshat

i already knew the callable bonds, but could not comprehend non refundable features in it

regards

deepak kanodia

varsha.rajpurohit
Posts: 9
Joined: Thu Sep 06, 2012 10:08 am

Re: callable non refundable bonds

Postby varsha.rajpurohit » Fri Sep 07, 2012 12:27 pm

HI,

A Callable Non Refundable Bond is a bond which you can call but cannot pay for it by issuing another bond. You would have to pay for it from out of your Operations ie Operating Profit.

eg if you have taken up a loan and want to prepay it.If it is non refundable then you cannot prepay it by taking another loan you will have to pay for it from your income.

Hope this helps.

deepakkrkanodia
Finance Junkie
Posts: 49
Joined: Thu Aug 09, 2012 4:45 pm

Re: callable non refundable bonds

Postby deepakkrkanodia » Fri Sep 07, 2012 12:48 pm

ms varsha

thx for reply

regards

deepak


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