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High-yield, high-risk bonds, like other bonds, may contain redemption or call provisions.
Your loan may have a call provision at 5-7 years, which means you'll have to re-qualify.
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High-yield, high-risk bonds, like other bonds, may contain redemption or call provisions.
Your loan may have a call provision at 5-7 years, which means you'll have to re-qualify.
A bond call will almost always favor the issuer over the investor; if it doesn't, the issuer will simply continue to make the current interest payments and keep the debt active. Typically, call options on bonds will be exercised by the issuer when interest rates have fallen. The reason for this is that the issuer can simply issue new debt at a lower rate of interest, effectively reducing the overall cost of their borrowing, instead of continuing to pay the higher effective rate on the borrowings.