Glossary of Municipal Securities Terms

MAKE WHOLE CALL

A type of call provision allowing the issuer to pay off debt early that is designed to protect the investor from losses as a result of the earlier call. In order to exercise the call, the issuer must make a lump sum payment derived from a formula based on the net present value of future interest payments that will not be paid as a result of the call. Because the cost can often be significant, such provisions are rarely used.

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