A bond warrant is a financial instrument that gives its holder the right, but not the obligation, to buy or sell a specific bond at a specific price either on a particular date or within a specified period of time. It is issued either by the entity issuing the bond or another issuer. A bond warrant is an option that can be exercised into a deal sweetener (kicker), represented by the underlying fixed-income security (the bond). In other words, the holder of a bond warrant, usually the buyer of a bond or note, can exercise the warrant to acquire another fixed-income security with a similar coupon.
On the other hand, a warrant-linked bond (warrant bond) is a bond that carries fixed coupon (interest payment) and the right (embodied in a warrant) entitling the bearer of the bond, after the passage of a specific period of time, to purchase specific number of shares in the issuing company (a joint-stock company) at a preset price. A warrant-linked bond is a fixed-interest bond combined with an attached warrant. The issuer of the warrant (on its stock) is the same company issuing the underlying bond.
