Puttable Bond

A puttable bond is a fixed-income instrument that gives the bondholder—rather than the issuer—the right to demand early repayment of the principal before the bond's stated maturity date, at a predetermined put price and on specified put dates. This embedded option benefits investors when interest rates rise, as they can exit the bond at par and reinvest at higher prevailing yields instead of being locked into a lower coupon. Because the put option favours the investor, puttable bonds typically offer a lower yield than comparable non-puttable bonds. They are less common than callable bonds in Indian markets but are occasionally structured in corporate and infrastructure debt issuances.