Forums  > Pricing & Modelling  > Callable Bonds (Fxd for Life, Float for Life, Fxd to Float)  
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Joined: May 2017
Posted: 2017-05-25 20:16
Hello guys

I am new to this forum.

During the last couple of months the callable bond topic has dominated US investment grade corporate bond markets with many financial companies issuing various forms of callable bonds. Regultory aspects (e.g. TLAC funding) have been driving this form of funding. Banks have used different styles of callable bonds, e.g. Fixed for Life Coupon bonds, Floating Rate Notes or Fixed to Float (where the Fixed Coupon turns into a Floating Coupon if the bond isnt called). The first call date usually appears one year before maturity (some bonds are european style, some are bermudian or american style options). Still some industrial companies issue bonds with a longer call structure (Transcanada has most recently issued a 60NC10 bond 60 years maturity if the bond is not called after 10y).

Since I am new to the topic of pricing callables in general, I was wondering whether somebody could help me out with any useful comments or literature references. How should we compare the different styles? What kind of interets rate models should be used to price those bonds? What kind of numerical methods should be used?... In case I have missed relevant posts then I am sorry

Thanks very much and best regards
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