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Definition: Any Interest Date Call
Any Interest Date Call is a mechanism in some bonds issued by local government bodies to fund their expenditures (municipal bonds) where at any given point of time the issuer of the bond can gain possession of the bonds. This can be done at the date when the payment of the interest is to be done.
Intimation of such instances are told to the investors beforehand so that they can exercise their rights when the call is going to happen. A given price and interest is paid to the holder of the bond when the call is exercised. The bondholder will have higher reinvestment risk because if the market interest rate is lower than the interest rate at which the bond was issued, the bondholder will be at a loss, as the issuer can redeem the bonds and issue new bonds at current lower (less attractive) interest rate, thus, the bondholder will have to pay more to own a bond now. The price of such bonds are lower than the bonds without this provision and consequently the yields are usually higher.
In this case, bond issuer will have to wait for the first call date but might not have to pay any fee in most of the cases.
For example: A person who buys a municipal bond with any interest date call provision will have to pay less than a normal bond, for the reinvestment risk taken and the bond issuer will have a right to redeem the bond an any date when the coupon interest is to be paid.
Price of the bond = Price of a straight bond – Price of the call option
The yield will be higher than a yield on a straight bond. Supposedly, the bondholder receives semiannual payment of the coupons on July 15th and December 15th, then the issuer can redeem the entire issue or a part of it on these dates.