if callable bonds have lower YTM becaused they are priced to call, when are these bonds supposed to be called?

Answer 1

Let me elaborate just a tad. Normally, a bond will not be called on the call date if current interest rates are above or at the cupon of the bond.

If interest rates are lower on the call date, the bond is likely to be called because the issuer can then issue more bonds at a lower rate.

Answer 2

A bond which the issuer has the right to redeem prior to its maturity date, under certain conditions. When issued, the bond will explain when it can be redeemed and what the price will be. In most cases, the price will be slightly above the par value for the bond and will increase the earlier the bond is called. A company will often call a bond if it is paying a higher coupon than the current market interest rates. Basically, the company can reissue the same bonds at a lower interest rate, saving them some amount on all the coupon payments; this process is called "refunding." Unfortunately, these are also the same circumstances in which the bonds have the highest price; interest rates have decreased since the bonds were issued, increasing the price. In many cases, the company will have the right to call the bonds at a lower price than the market price. If a bond is called, the bondholder will be notified by mail and have no choice in the matter. The bond will stop paying interest shortly after the bond is called, so there is no reason to hold on to it. Companies also typically advertise in major financial publications to notify bondholders. Generally, callable bonds will carry something called call protection. This means that there is some period of time during which the bond cannot be called. also called redeemable bond. opposite of irredeemable bond or non-callable bond.

Answer 3

Wow, what a long explanation and the guy didn't answer the question. They can be called on their call date, which is on the bond specs.