2020Journal of Applied Business and EconomicsOpen access

Early Bond Repurchases Without Retirement

Sheldon R. Smith, Marty D. Van Wagoner

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Abstract

Companies can buy back and retire their own bonds before maturity, resulting in a possible gain or loss on the extinguishment of debt. What would happen if a company repurchased its own bonds before maturity but did not retire them, potentially holding them for resale later before the bonds mature? This paper provides a conceptual exploration of the early repurchase of bonds without a corresponding retirement.

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Companies can buy back and retire their own bonds before maturity, resulting in a possible gain or loss on the extinguishment of debt. What would happen if a company repurchased its own bonds before maturity but did not retire them, potentially holding them for resale later before the bonds mature? This paper provides a conceptual exploration of the early repurchase of bonds without a corresponding retirement.

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Available abstract

Companies can buy back and retire their own bonds before maturity, resulting in a possible gain or loss on the extinguishment of debt. What would happen if a company repurchased its own bonds before maturity but did not retire them, potentially holding them for resale later before the bonds mature? This paper provides a conceptual exploration of the early repurchase of bonds without a corresponding retirement.

Key concepts: Maturity (psychological), Bond, Debt, Extinguishment, Business, Monetary economics, Economics, Finance

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