Business and Personal Finance Dictionary

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• SOFT CALL PROTECTION (FOR CONVERTIBLE BONDS)
  
  One of two types of call protection. Soft or provisional call protection prohibits an issuer from calling a bond issue until a certain threshold price level for the underlying stock has been reached. For example, the bond structure might specify that the bonds may be called when the closing price of the underlying stock is at least 120-150 percent of the conversion price for any 20 out of 30 consecutive trading days. Soft call provisions will be in effect for two to three years after hard call protection has expired. Soft call protection is a compromise between issuers and investors. It guarantees that the issuing company will not be able to call the bonds until the investors have achieved a certain level of profitability, but it also provides issuers with more flexibility than that available from hard call protection and allows the company to call the bonds once the bondholders have achieved a certain threshold level of returns.
  
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