Puttable bond

A puttable bond is a bond that contains a put option. This gives the bondholder the right to sell the bond back to the issuer after a certain number of years, or if certain events (as specified in the prospectus) are triggered. Investors will typically ‘pay’ for the put option through a lower return to compensate the issuer for the put risk. The prospectus or final term sheet will lay out the terms and conditions under which the put can be exercised.