We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is Call Protection?

Malcolm Tatum
By
Updated Jan 28, 2024
Our promise to you
WiseGeek is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At WiseGeek, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Call protection refers to provisions that are contained in the terms of agreement associated with a callable bond. Essentially, call protection refers to the period of time in which the debtor cannot exercise the privilege of calling for an early redemption of the security from the investor. In some cases, call protection also outlines the rights and privileges of the bond or holder, and how they relate to the conditions that must exist in order for the security to be redeemed before the maturity date.

Callable bonds are constructed to allow the issuer of the loan or bond to call for the redemption of the security. In order to ensure that the investor who chooses to purchase the bond can anticipate a reasonable return on his or her investment, terms and conditions are included that spell out how and when the debtor can call for redemption. Generally, this includes specifying a period of time that must pass before the debtor can entertain the possibility of calling the bond. For example, ten-year bonds may include the proviso that they cannot be called until at least five years from the purchase date has passed. The bondholder is thus assured of receiving at least some return on the investment, receiving the interest accrued up to the date that the debtor chooses issue the redemption order.

Along with setting the perimeters of how early the bond can be called, call protection often defines what type of a premium the holder will receive from the debtor. This premium is compensation above and beyond the interest accrued up to the date of the call. By including this type of detail in the call protection, it is possible for the investor to project the approximate return in the event that the bond is called early.

Call protection may also include information about any penalties that the debtor may incur as a result of issuing an early call. This information is helpful for the debtor, in that it is possible to weight the cost of calling the bond at any given point in the maturation process, rather than allowing it to reach full maturity. In general, call protection will include provisions that are helpful for both the investor and the debtor, providing both parties with a solid understand of what will take place in the event of an early call.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Malcolm Tatum
By Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including WiseGeek, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.
Discussion Comments
Malcolm Tatum
Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
Learn more
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.