Series 53: Tender Option Bonds

Tender Option Bonds

If a callable bond allows the issuer the right to buy back or redeem the bond on demand, a tender option bond allows the investor the right to return or “put” the bond to the issuer on demand. The investor, rather than the issuer, may choose between keeping and selling the bond.

A tender option bond, sometimes referred to as an optional tender, is a bond that provides the bondholder with the right to surrender the bonds to the issuer at a predetermined price (usually par). The dates within which the bond is tendered are exclusively desig