earliest date a bond issuer may redeem all or part of the issue at a price specified in the indenture. The first exercisable call date is noted in the bond offering sheets. Mortgage backed bonds may become callable if original principal falls to a certain level, even if no call date is given. The issue may also be called early if a percentage of the amount raised, say 80%, is not reinvested in mortgages within a two-year period. The purpose is to keep tax-exempt mortgage financings from being classified as arbitrage deals, and losing the tax exemption on interest.
first date specified in the indenture of a corporate or municipal bond contract on which part or all of the bond may be redeemed at a set price. An XYZ bond due in 2030, for instance, may have a first call date of May 1, 2013. This means that, if XYZ wishes,bondholders may be paid off starting on that date in 2013. Bond brokers typically quote yields on such bonds with both yield to maturity (in this case, 2030) and yield to call (in this case, 2013).
