Putable bonds give the bondholder the right to sell the bond back to the issuer before maturity under specified conditions. This is the opposite of callable bonds — where the issuer has the call right, in putable bonds the investor has the put right.
The bond agreement specifies the put date (when the bond can be put back) and put price (usually face value).
Putable bonds serve as a safety net for investors. If market interest rates rise and the bond's market value drops, the investor can exercise the put option to get their money back.
This feature increases liquidity for investors and allows issuers to offer lower coupon rates since investors are willing to accept less interest in exchange for the put protection.
In Bangladesh, putable bonds are limited in the corporate bond market. Some banks or financial institutions may offer similar features in their long-term deposit schemes.