Puttable Bonds

Puttable bonds are a type of debt security that gives the bondholder the right to sell the bond back to the issuer at a predetermined price before it matures. This feature provides investors with added security, allowing them to recover their investment if market conditions worsen or interest rates rise, making the bond less attractive. For issuers, these bonds often carry slightly higher interest rates because of the added flexibility for investors. Overall, puttable bonds balance the needs of both parties by offering investors an exit option while enabling issuers to access funding.