Soft Put vs Hard Put

CFA Level II Fixed Income
#1

There is a statement that I do not get;

" a bond with an embedded soft put is redeemable through the issuance of cash, subordinated notes, common stock, or any combination of theses three securities. In contrast, a bond with a hard put is only redeemable using cash.

What does hard put and soft put mean?

#2

Exactly as the definition you just pasted.

Hard put can only be redeemed by cash (when you put the bond, you get cash) while the soft put can be redeemed for cash, subordinated notes, stock, etc. (when you put the bond, you get many choices, though I’m not sure if the choice is yours or the issuer)

#3

Thanks!

Do you know which one is more beneficial for bond holders?

#4

The one where they get to decide, instead of giving that decision to the bond issuer.

#5

for soft puts, issuer chooses what consideration is redeemable.