What is Bond Retirement?

A bond retirement occurs when an organization repurchases bonds that it had previously issued to investors. There are three scenarios in which a bond retirement can occur, which are as follows:

Maturity date arrives. A bond retirement may occur when bonds reach their scheduled maturity dates, in which case the issuer is obligated to retire them. In many cases, the issuer sells replacement bonds, so that it is effectively rolling over the debt.
Issuer calls the bonds. A bond may be callable, in which case the issuer can retire the bonds early if it is financially advantageous to do so. This is usually only allowed after a certain amount of time has passed since the original issuance date, as stated in the bond indenture agreement.
Investors convert the bonds. Bond retirement can occur at the behest of investors if the bonds are convertible, in which case the bonds are retired and replaced with the equity shares of the issuer. Investors only do this when the market price of the shares has risen enough to generate a profit for them.