Many bonds are callable, which means they can be repaid early by the borrower after a period of time for a pre-agreed price.

Bonds usually benefit from “call protection” - a period of time where the issuer cannot call the bonds, this feature allows bondholders to lock in their yield for a period of time following issuance.

Nevertheless, in many cases the issuer can still repay a bond during the call protection period if they chose to, by compensating (‘making whole’) the bondholder.

The compensation is known as a "Make Whole Premium" and involves paying all future coupons until the first call date, as well as the first call price, in a single lump-sump that is computed by discounting all these cashflows at a favourable rate.