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EXTENDABLE NOTES

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▪Extendable notes are issued for 10 years with flexibility to the issuer to review the interest rate every two years. 

▪The interest rate is adjusted every two years to reflect the then prevailing market conditions by trying the interest rate to a spread over a bond index such as two years treasury notes.

▪However, investors have a put option at par value every two years i. e. they have the right to sell the bond to the issuer at a fixed rate on the expiry of every two years.

▪This instrument encourages long – term investor participation in the scheme by favourable review of interest rates every two years.

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