Early bond redemption is the repayment of some or all of a bond issue before its scheduled maturity. It happens in three ways. The issuer may exercise a call right in a callable bond, usually to refinance at a lower rate, on the dates and prices in the call schedule or at a make-whole price that compensates holders for lost interest. The holder may exercise a put right. Or the terms may require repayment after a trigger such as a change of control, a tax law change, a regulatory event or a default.
The issuer gives notice through the trustee or agent within the period set in the terms, stating the redemption date and price. Holders receive that price plus accrued interest, and interest stops running. If only part of the issue is repaid, the event is a partial bond redemption. The general mechanics are described under bond redemption.