Corporate action events
BPUT: Put Redemption
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BPUT is an early redemption at the holder’s request: the bond’s terms let holders sell the bond back to the issuer at a set price on certain dates. Holders who want their money back instruct; those who do nothing keep the bond.
- Code
- BPUT
- Usually announced as
- VOLU (CHOS also allowed)
What BPUT means
A puttable bond gives the investor, not the issuer, the right to ask for early repayment, usually at par and on fixed put dates. Some puts are triggered by an event such as a change of control of the issuer. The put protects investors if interest rates rise or the issuer’s credit worsens.
Only the bonds that holders put are redeemed. The nominal value of the remaining bonds does not change, and the rest of the issue stays outstanding until the next put date, a call or final maturity. Holders who put receive the put price, normally with accrued interest, on the put payment date.
When you see it
- An MT564 with
:22F::CAEV//BPUTand normally:22F::CAMV//VOLU, with optionsCASH(put the bonds) andNOAC. The SMPG grid also allows CHOS. The notice gives the put price, the market deadline (often several weeks before the put date, because paying agents need notice) and the payment date. - BPUT vs issuer-driven redemptions: MCAL (full early call), PCAL (partial call with nominal reduction) and DRAW (partial redemption by lottery) are decided by the issuer and are mandatory. REDM is redemption at final maturity. BPUT is the only one where the holder decides.
What to do next
- Put deadlines are strict and early. Get the client decision well before the account servicer’s response deadline and instruct with an MT565 (
:22F::CAOP//CASH, nominal in:36a::QINS). The bonds are normally blocked once instructed. - When the MT566 arrives, reconcile the nominal debited with the cash credited: principal at the put price plus any accrued interest, which may be reported as a separate amount. Close or reduce the position and release the remaining bonds.