Can someone explain the difference between a sinking funds and a callable bond?
I do not see the difference
Sinking funds, the issuer usually has to pay some of the principal each year, so their price doesn’t usually fall as much during bear markets, compared to callables.
ok thks
Complying with a sinking fund provision isn’t optional; exercising a call option is.
What about sinking and putable? They both act as protection as interest rate increase?
Only the putable. The sinkable is simillar to a callable bond, because the issuer pays you back principal periodically. However, the sinkable provision, depending on the terms, has more upside than a callable because it is not exercisable, and you can reinvest the repayments at higher interest rates.