I was looking at this bond on TD Ameritrade:
This is a callable bond, so I'm wondering how that works, exactly.
TD Ameritrade says that this bond is "cont callable," which I assume is an abbreviation for "continuously callable." That means that the issuer can, at any time after the call date, pay the face value of the bond (plus accrued interest, I guess) in order to discharge their obligations. So, in this case, since the call date is only 6 months before the maturity date, this means the Ford Foundation can pay back the face value up to 6 months early, and thereby save up to 6 months of interest payments. (Pretty insignificant compared to the term of the bond.) Right?
It looks like there's an additional call provision, the make-whole call. This one is a bit more mysterious. My understanding here is that the issuer can exercise this one at any time, but they have to pay more depending on prevailing interest rates. I think that essentially, they have to pay enough that I could then go and buy a treasury bond with the same returns and still have a little bit left over. Am I on the right track there at all?
How can I tell how much, exactly, they have to pay me to exercise this option? Can I find that information on the TD Ameritrade website?
If the issuer exercises the make-whole call option, can that result in me getting a yield worse than the "yield to worst"?