EXTENDABLE BOND

Long-term debt security issued with an option to prolong its maturity period. Depending on the terms, the bondholder and/or bond issuer may have one or more choices to defer the repayment of the bond’s principal while the interest payments are paid continuously. Aside from that, the bondholder or bond issuer may have the opportunity to exchange it for another bond with a longer maturity at the same or higher interest rate. Since these bonds have an option to stretch the maturity, a feature adding value to the bond, these are sold at a higher price than non-extendable ones. Also called extendable note.

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