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What’s the difference between a call for sinking fund purposes and a refunding call? 

What’s the difference between a call for sinking fund purposes and a refunding call? 

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Answer #1

A call for sinking fund purposes is different from a refunding call.

Reasons as as follows:
1. Call premium is not required for a sinking fund call.
2. Within a year, only a certain small percentage of the issue is callable.
3. In case of refunding call the issuer gets the freedom of calling for redemption. The issuer can call the bond issue for redemption.

The call provision is made so that when the issuer calls the bonds, he pays the subscriber a value higher than the Par Value.

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