Put date: miss it and you may end up holding a different bond

A bond put (in Russian practice, an "offer") is a pre-announced date on which holders can tender the issue to the issuer for redemption at par, while the issuer gains the right to reset the coupon for the entire remaining term. The two events are linked: the rate at which you bought the bond is only fixed up to the put date, and after that a new one applies. A holder who fails to submit a tender request on time therefore formally owns the same issue, but in practice owns a different security, with a different coupon, a different yield and often different liquidity. Missing a put is neither a penalty nor a loss of the bond; it is tacit acceptance of terms you did not choose.

Two mechanisms that get confused under one word

An irrevocable offer (a put) is the issuer's obligation to buy back the bonds from any holder who demands it. Here the decision is yours: tender them and you receive par plus accrued coupon interest; do not tender them and you stay in the bond.

A revocable offer, or call option, works the other way round: the right to redeem the issue early belongs to the issuer, and nobody asks your opinion. Issuers exercise this right when borrowing has become cheaper: they retire expensive debt and come back to the market with a new issue at a lower rate. For the holder this is reinvestment risk: the money comes back at the worst possible moment, when it can no longer be placed at the previous rate.

Puts are mainly a feature of corporate and sub-federal debt. Government issues carry no right to early redemption at the holder's request; their term to maturity is known from the outset. When you analyse a specific issue in the bonds section, look not only at the maturity date but also at whether someone's put or call stands between you and that date, and whose it is.

Why the new coupon, not the buyback, is the main risk

The issuer sets the post-put coupon at its own discretion and is required to disclose it through the official disclosure feed. The problem is timing: the disclosure often lands in the final days of the tender window, and sometimes the new rate becomes known only when it is already too late to tender the bond. The decision has to be made on incomplete information.

Cutting the coupon to a token level is a legitimate tactic, not an abuse. It openly nudges holders to exit: the issuer reduces the amount of debt outstanding without breaching a single obligation. Those who stay end up with a bond that trades well below par on the market, by exactly enough to bring its yield back in line with the market.

For the same reason, the duration of such an issue is calculated to the nearest put date. A bond with a distant maturity behaves like a short one until the put date has passed.

The procedure: where exactly the deadline gets lost

Tendering a bond for buyback is not a market sale but a separate procedure with its own window.

Step 1: find the dates in the issue documents: the put date, the period for accepting notices and the buyback agent. Step 2: check your broker's internal deadline. It is always earlier than the official one, because the broker needs time to collect the instructions and pass them on to the agent. This is the step at which puts are most often missed: the issuer's deadline has not yet expired, but the broker's has. Step 3: submit an instruction to participate in the put, usually as a request through your broker, sometimes for a fee. Step 4: monitor the settlement of the trade: it settles separately from the regular trading mode, and the cash is not credited on the day the notice is submitted.

The dates themselves are easiest to track in the corporate events calendar, and announcements of new rates in the news and disclosure feed. The specific tender periods, tendering fees and internal deadlines differ for every issue and every broker; there are no general values that could be quoted here. You need to read them in the issue documents and in your broker's fee schedule.

If you have already missed the put

The bond has not gone anywhere, and it will be redeemed on schedule. From here the decision comes down to a comparison: the new coupon against market rates. If the coupon has been cut, you can sell the bond on the secondary market, but be prepared for two unpleasant surprises. The price has already priced in the new rate, so the sale will most likely go through below par. And liquidity usually dries up after a put: most of the volume has gone back to the issuer, the order book holds only sparse orders with a wide spread, and a large position will have to be unwound in parts.

The financial result of a buyback or sale is included in the tax base as a result of securities transactions; the procedure for determining the base is set by 13%.

For a portfolio, the practical takeaway is simple: a put date is something to enter in your own calendar at the moment of purchase, not something to learn about from a broker's report. The terms used in this article are explained in the glossary.