I am a little confused with callable bond and simply just buying the bond back from a issuer's perspective.
First all callable bond would likely to be called when the interest rate fall. From my understanding that works the same thing as a call option where there would be a strike price and such so when a issuer call the bond back when at higher bond value they would profit from the difference.
Now couldn't the issuer simply just buy the bond back ? when interest increase, which means the bond value decrease, therefore the company now can play less to buy back their debt.
I don't see the difference of the two or when to use one or the other from an issuer's point of view. Can someone clarify this for me ? |
发表于 2011-7-11 19:44
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