What is Putable Bond?

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A **Putable Bond** is a fixed-income security that grants the bondholder the right, but not the obligation, to sell the bond back to the issuer at a predetermined price, typically par value, on specified dates before the bond's maturity. This embedded put option serves as a form of downside protection for the investor, making the bond more attractive and consequently allowing the issuer to offer a lower coupon rate compared to an otherwise identical straight bond.

Putable Bond

What is Putable Bond?

What is the primary mechanism of a Putable Bond and how does the embedded option affect its valuation and yield compared to a straight bond?

How do rising interest rates and credit risk influence the decision to exercise the put option on a Putable Bond?

What role do Putable Bonds play in Real-World Asset (RWA) tokenization and how do they enhance on-chain liquidity?

How is the value of a Putable Bond determined using option pricing models and what is the significance of its effective duration?

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