sinking fund bond

Sinking Fund Bond

A bond with a fund or account into which an issuer deposits money on a regular basis to repay the bond when it matures. For example, if a company issues a bond with a balloon maturity of seven years, one may put money into a bond sinking fund for seven years in order to be ready to pay off the principal when it comes due. Some bonds have sinking fund provisions, requiring the issuer to put money aside to repay bondholders at maturity. See also: Sinking Fund Call.

sinking fund bond

A bond issue for which the issuer is required to establish a sinking fund to provide for the orderly retirement of the bonds. Also called sinker.