A partial bond redemption is a repayment of some, but not all, of the principal of a bond issue ahead of its final maturity. It occurs when an issuer exercises a call option over part of the issue, when a bond sinking fund requires scheduled retirements, or when the terms provide for amortisation, as with an amortising bond or many securitisation notes.
There are two methods. In a drawing, specific bonds are selected by lottery and repaid in full, so some holders are redeemed and others are untouched. In a pro rata redemption, every holder is repaid the same proportion, either by reducing the nominal amount held or by applying a pool factor that scales down the outstanding principal of each bond. The method determines how depositories and custodians allocate the event to client accounts. See early bond redemption and redemption schedule.