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| A potentially strong form of protection for lenders/investors in securities, designed to mitigate the adverse effects of call risk for investors.
| | == Summary == |
| | | Importing files from local file repository |
| Under a Spens clause the borrower/issuer has to value the cash flows beyond the date of the call/redemption at the government bond yield, or some other low rate.
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| This potentially makes it prohibitively expensive for the issuer to take an early redemption.
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| For example the Bank of England's purchase scheme for corporate bonds favours bonds having a Spens clause.
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| The consequence of a Spens clause for the investor is that they can re-invest the redemption monies in government stock, thus preserving their originally expected cash inflows at lower risk.
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| == See also == | |
| * [[Call protection]]
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| * [[Call risk]]
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| * [[Loan agreement]]
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| * [[Make whole clause]]
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| * [[MCT]]
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| * [[Redemption]]
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Latest revision as of 09:28, 27 July 2023
Summary
Importing files from local file repository
