Puttable Bond
A bond the holder may sell back to the issuer before maturity, at a stated price on stated dates.
How it is identified
Test: the terms give the holder an option to require early redemption at a specified price and date
Unit
qualitative
In depth
The put option belongs to the holder, which is the mirror of a callable bond and makes it more valuable — so a puttable bond pays a lower coupon than a comparable straight bond. It is exercised when rates have risen and the bond has fallen in price, letting the holder recover par and reinvest at the higher rate. This caps the holder's downside from rate moves and effectively shortens the bond's duration. The option is only worth what the issuer can honour, so a put against a distressed issuer may be unexercisable in practice.
Worked example
An 8% bond puttable at par in three years when rates rise to 10%: the market price would otherwise be about ₹950, but the put lets the holder recover ₹1,000 and reinvest at 10%.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Puttable Bond” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.