Sinking Fund Bond Financing Programs

Investors have been attracted to sinking funds to raise capital, increase cash flow and reduce financing costs. The article will present an overview of the sinking fund including the characteristics of a bond sinking fund and the general provisions of a sinking fund. The article will also present a discussion of the benefits and drawbacks associated with investing in a sinking fund. Overview A sinking fund is a fund in which a firm makes consistent payments to ensure that there will be sufficient funds to repay the bondholders when the bond matures. This type of debt fund is used to secure specific assets in companies to redeem the bond at maturity.[1] Many bonds with sinking fund clauses indicated in their indenture obligate the issuer to make scheduled payments into a fund or buy back a certain percentage of the bond issue during each specific period. Characteristics Specific sinking fund – Sinking funds established for a specific issue Aggregate sinking fund –…

Read more detail on Recent Banking and Finance Law posts –

This entry was posted in Banking and Finance law and tagged , , , , . Bookmark the permalink.

Leave a Reply