An option to purchase a fixed-income security which is newly issued and attached to another “on the run” fixed-income security. Put another way, this option gives the holder the right to buy another same-coupon security at a preset price (at-par price) by a specific date. Contingent takedown options are typically originated as sweeteners or kickers in new bond issues designed to reduce interest burdens on issuing entities.
December 16, 2024
