Multi-Callable Bond

A bond that allows the issuer to call or redeem it on particular future dates that are specified at the time of issuance. Since the issuer benefits by gaining flexibility with regard to the bond's maturity, the coupon on the bond may be higher than the prevailing market interest rate.

Multi-callable bonds or notes are generally of two types - step-up notes or accrual notes. In multi-callable step-up notes, the coupon increases if the notes are not called by the issuer, while in accrual notes, the interest rate remains unchanged and accrues at a constant rate.