What Is a Make Whole Call?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 15 September 2019
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A make whole call or MWC is a type of bond call that places certain provisions on the issuer that must be met if the bond issue is called early. This structure helps to ensure that even if the bond is called early, the investor still receives equitable compensation, or is made whole as part of the early bond settlement. Typically, the terms of a make whole call will also require that the bond issuer provide a lump sum payment to the investor.

With a make whole call, the issuer must meet all the criteria established in the bond contract in order to initiate the calling process. When the bond is called, the issuer must provide the investor with a payment that is considered to be at par value at the very least. In addition, the amount of the settlement payment may be based on a comparison with a similar type of bond issue or even some type of Treasury security, utilizing the current yield on that issue as the guidelines for settling the called bond.


The benefit of a make whole call to the investor is that the odds of not only recovering the amount of the original investment but also making some sort of profit from the venture are enhanced. At the same time, the structure of a make whole call does place a greater financial obligation on the part of the issuer. This aspect of the bond structure will often help to minimize the chances of the bond being called early, unless there are significant reasons for doing so. From this perspective, the provision in a bond issue tends to increase the chances of the bond remaining in place until it reaches maturity and provides the investor with the returns originally anticipated.

While the use of a make whole call provision has become increasingly common since the latter years of the 20th century, not all bonds are structured to include this type of protection. For this reason, investors should read all the terms and conditions that have to do with any bonds they are considering for purchase. The goal is to not only understand the possible yield from the investment, but also what events may trigger an early call, and what type of obligation the issuer will have to honor if the bond is called early. When a true make whole call provision is included in the bond terms, the investor has a much better chance of realizing a return that is at least acceptable, even if the bond does not remain in place all the way to maturity.


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