An interval between the time a callable bond is issued and the time it can be called by the issuer. A cushion is typically stipulated in a bond indenture or preferred stock. If the issuer needs to retire the issue during a cushion interval, a premium over parity (above the par value of a bond or preferred stock) must be paid to bondholders or preferred stockholders.
A discretely callable bond can be called on any coupon payment date after the cushion period ends, while a continuously callable bond may be called at any time after the cushion period ends and up until the maturity date of the bond or preferred stock.
A cushion is also known as a call protection. Bonds with a call protection are usually referred to as deferred callable bonds.
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