Bond redemption

Bond redemption is performance of the obligation specified in the issue terms to return the face amount or part of it. The date and procedure are determined by the security’s terms. For an ordinary bond, this may be a single payment at maturity; for an amortizing bond, it may be a series of reductions in the face amount. Perpetual instruments require separate consideration.

What the payment means

If an investor bought a security above face value, returning the face amount at redemption does not mean returning the entire purchase price. Part of the result depends on coupons received earlier. If the issuer does not perform the obligation, the arrival of the calendar date alone will not ensure that money is received.

Distinctions and planning

Redemption should not be confused with selling in the market or with an early repurchase under separate terms. Documents may provide the holder or issuer with rights to take early action, as well as special tender or presentation procedures. For expense planning, check not only the final date but the entire payment schedule, possible changes in face amount and credit risk. Related reading: [maturity and offer](/guides/maturity-and-offer/), [yield to maturity](/glossary/dohodnost-k-pogasheniyu/) and [bond scenario](/tools/bond-scenario/).

General financial concepts; not an individual recommendation under Russian jurisdiction.

Source references retained: term-bonds-corporate and market-rate-risk; face amount, ordinary and amortizing bonds, perpetual instruments, purchase above face value, coupons, issuer non-performance, early repurchase, tender procedures, payment schedule and credit-risk caveats preserved.

What the payment means

Distinctions and planning

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