# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Harmless Warrant

Written By
Paul Tracy
Updated October 6, 2020

What is a Harmless Warrant?

A harmless warrant is a bond provision that instructs a holder to relinquish the bond to the issuer should the holder purchase another bond from the same company with comparable features.

How Does a Harmless Warrant Work?

A bond with a harmless warrant, also known as a wedding warrant, requires the holder to return the bond to the issuer if the holder purchases a different bond from the same company that quantitatively resembles the original bond.

For example, suppose Company ABC issues Bob a bond with a $1,000 par value, a coupon rate of 5%, and a maturity date of December 31, 2011. Pursuant to the bond's harmless warrant clause, Bob may not purchase an additional bond from the company that has these same features unless he is prepared to surrender his existing bond upon the purchase of the second.

Why Does a Harmless Warrant Matter?

Issuers insert a harmless warrant clause to maintain a specific level of debt. It effectively ensures that when additional debt is issued, a corresponding amount of debt is redeemed. It is especially important that investors recognize and account for a harmless warrant when evaluating which bonds to purchase.

Ask an Expert about Harmless Warrant
At InvestingAnswers, all of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Harmless Warrant.
Be the first to ask a question

If you have a question about Harmless Warrant, then please ask Paul.

Ask a question

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers.

If you have a question about Harmless Warrant, then please ask Paul.

Ask a question Read more from Paul

Read this next

Paul Tracy - profile
Ask an Expert about Harmless Warrant

By submitting this form you agree with our Privacy Policy

Share
close
Don't Know a Financial Term?
Search our library of 4,000+ terms