QUICK DEFINITION
Callable Bond is a bond that gives the issuer the right to repay the security before its stated maturity under specified conditions.
WHY IT MATTERS
Why Callable Bond matters in bond markets
Callability limits upside for investors when yields fall and creates negative convexity in many structures.
MARKET CONTEXT
How to think about it
Bond investors use callable bond as part of a wider framework that links prices, yields, cash flows, liquidity and risk. The concept should therefore be read together with its related terms rather than as an isolated definition.
Is Callable Bond important for fixed-income investors?
← Back to the Bond Market Glossary Yes. Callability limits upside for investors when yields fall and creates negative convexity in many structures.