Dual Currency Bond

Bond denominated in one currency, but paying interest in another currency at a fixed exchange rate.

Definition: Dual currency bonds are denominated in one currency, but pay interest in another currency at a fixed rate of exchange. Dual currency bonds can also pay redemption proceeds in a different currency froDefinition: m the currency of denomination.

A eurobond that pays interest (makes coupon payments) in one currency but pays the principal in a different currency.

There are three methods used in applying the exchange rate to principal and interest payments from dual-currency bonds: 1. Use of the prevailing exchange rate at the bond's issuance. 2. Use of the existing exchange rate (spot rate) at the time cash flow payments are made. 3. The use of the currency that is chosen from the two currencies by the investors or issuers of these bonds. Also known as an option currency bond.

Make Whole Call

A type of call provision in a bond allowing the borrower to pay off remaining debt early. The borrower has to make a lump sum payment derived from a formula based on the net present value (NPV) of future coupon payments not paid because of the call.

A make whole call will be defined in the indenture. The issuer doesn't expect to have to use this type of provision, but if they do, investors will be compensated, or "made whole." Because the cost can often be significant, such provisions are rarely invoked.