Regular mandatory prepayments by a borrower regardless of price movements in the secondary bond market to redeem a certain amount of an issue through payments to a special account, thus reducing the principal amount due at maturity. See Pro Rata Sinking Fund, Purchase Fund.
Money regularly set aside by a company and used to redeem its bonds, debentures, or preferred stock.
Periodic deposits of money into an account that, with its interest earnings, will be used to replace assets or to retire loans.
A fund set aside from the income from property that, with accrued interest, will eventually pay for replacement of the improvements. A similar fund set aside to pay a debt. Back to the Top
A custodial account used by a bond issuer (such as a corporation or government body) to place a predetermined amount each year toward payment of the principal on its bond issue. The sinking fund helps an issuer receive a higher rating for its bonds by essentially guaranteeing that the money needed to redeem the bonds will be available at maturity.
An annual reserve of capital required to be set aside out of current earnings to provide monies for retirement of an outstanding bond issue. Such a feature has favorable effect on the market value of the issue.
Funds set aside by a company to repay bond or preferred stock issues.
A fund into which a company sets aside money over time, in order to retire its preferred stock, bonds, or debentures.
A fund into which a bond issuer makes periodic payments over the life of the bond in order to systematically reduce the amount of principal due on its expiry.
a fund or investment where money is regularly added in order to accumulate a specific amount of money in a set time frame.The interest plus the money compounded and such a fund will accumulate to specific amount over a period of months or years.This fund can then be used to repay a loan, or to repair or improve a property.
A fund to which money is added on a regular basis that is used to ensure investor confidence that promised payments will be made and that is used to redeem debt securities or preferred stock issues.
A sinking fund requires that issuer's outstanding debt be paid down over time according to a set schedule. Sinking funds eliminate the need for a balloon payment at maturity and also can reduce price volatility.
Money set aside on a regular basis, sometimes from current earnings, for the specific purpose or redeeming debt.
Funds that are diverted from company in a predetermined plant to accumulate funds in a separate account to "pay off" company debt or redeem preferred stock.
a fund accumulated regularly in a separate account and used to redeem debt securities
a convenient means frequently resorted to for redemption of a debenture debt, and is especially suitable where the security is of a wasting character, leaseholds, mining property or a patent
a fund to which a firm makes periodic payments which will ultimately be used to retire a bond issue
an account into which regular payments are made and reserved for paying off debts
a provision included with certain bond issues, for part of the issue to be repaid on a regular basis before the stated maturity date of the bond
a sum of money set aside, usually annually, by the issuer of a bond or debenture to be used to repay all or part of the debt by maturity
A fund accumulated over a period of time for retirement of debt.
A provision in some bond issues that requires the issuer, during the life of the issue, to set money aside to repay maturing bonds. Periodically, some bonds are called and retired. using the money in the sinking fund to repay holders.
a trust account established by policy to provide for the orderly repayment of debt obligations. Sinking funds accumulate through annual payments and retain all investment earnings. Sinking funds are deducted form gross debt to yield net debt.
Money regularly set aside in a separate fund and invested by a company for the repayment of debt instruments (fixed deposits, debentures, other loans) or the redemption of preference shares, or for replacement of assets.
An account set up with regular payments made over a period of time for the purpose of paying for future maintenance and repairs of a capital nature (e.g. the fund established by a body corporate for the collection of strata monies for capital expenditure within the unit block).
Money accumulated on a regular basis in a separate custodial account that is used to redeem debt securities or preferred stock issues.
A fund established by bond issuers, generally required in the bond resolution, that is increased through time for the purpose of either retiring some of the outstanding bonds before their maturity or reducing the risk of default of the bonds
A provision that requires an issuer of bonds or preferred stock to retire some of the issue each year.
Money, either cash or an acceptable substitute, regularly set aside by a company out of its earnings at stated intervals to redeem all or part of its long-term debt as specified in the indenture. The creation of a sinking fund provides for an orderly amortization of a debt over the life of an issue. A Cash Sinking fund can be satisfied by cash or bonds purchased in the open market or called at the sinking fund call price. A Property Additions Sinking Fund is generally satisfied by pledging a stated portion of the value of unmortgaged property.
See: FLOW OF FUNDS – Sinking Fund.
A fund into which moneys are placed to be used to redeem securities in accordance with a redemption schedule in the bond contract. This term is sometimes used interchangeably with the term “mandatory redemption fund.” See: FLOW OF FUNDS – Mandatory Redemption Fund.
A gradually accumulated fund created to diminish a debt. At the end of a given period, the fund will have a sufficient amount, including interest earned, to replace the loss or satisfy the obligation that has fallen due.
A method whereby a company purchases a given percentage of its bonds or shares as per agreement in the trust indenture or prospectus. This provides the investor with some degree of liquidity, knowing that the company must purchase shares each year. Specialty fund. A mutual fund that concentrates its investments on a specific industrial or economic sector or a defined geographical area.
A fund designed to accumulate a designated amount of money over a specified period of time. The periodic amount of money deposited plus compound interest will accumulate to the designated amount of money over the specified period of time.
An account set up to reduce another account to zero over time (using the principles of amortization or straight line depreciation). Once the sinking fund reaches the same value as the other account, both can be removed from the balance sheet.
A fund generated through regular monthly payments, which is designed to finance major building works in the future, thus off-setting the need for a large one-off payment.
A fund set up by a company to retire, over a period of time, the major part of a preferred share issue, or a debt issue prior to maturity. The fund helps to "pay off" the debt issue over the term of the issue and can be compared to principal payments made by a mortgage holder. Even though the issue is outstanding until maturity, the small incremental payments made under a sinking fund can make the maturity of the bond issue less onerous on the company. Instead of having to re-fund the entire issue, there may only be a small outstanding balance. A sinking fund security is attractive to investors as there is more assurance that the debt will be repaid on maturity.
A fraction of a resort's management fee that is allocated specifically to ensure that the facilities and furnishings are kept in "like new" condition.
Separate accumulation of cash or investments (including earnings on investments) in a fund in accordance with the terms of a trust agreement or indenture, funded by periodic deposits by the issuer (or other entity responsible for debt service), for the purpose of assuring timely availability of moneys for payment of debt service. Usually used in connection with term bonds.
A bond with special funds set aside to retire the term bonds of a revenue issue each year according to a set schedule. Usually takes effect 15 years from date of issuance. Bonds are retired through either calls, open market purchases, or tenders.
Money accumulated by an issuer of bonds for the specific purpose of redeeming debt securities.
A fund with interest that will serve as payment for future replacements required for an income property.
Money regularly set aside by a company to redeem its bonds, debentures or preferred stock from time to time as specified in the indenture or charter.
Established to account for the accumulation of money providing for the retirement of bonds and the payment of interest.
Monies deposited in advance in anticipation of satisfying a debt in the future.
Some municipal or corporate bonds are issued with a sinking fund provision, which could be optional or mandatory. In the case of a sinking fund the issuer pays off the principal of the bond over time, for example 10% of the principal in each of the last 10 years of the life of the bond. If the sinking fund is mandatory the issuer must make these payments each year.
A sum of money usually set aside at regular intervals which will earn compound interest, ultimately sufficient to meet a known future capital commitment or loan repayment. Sinking funds may, for instance, be used to finance the replacement of Fixed assets at the end of their useful life or to redeem loans, stocks or other debentures upon maturity. Français: Fonds d'amortissement Español: Fondo de amortización
A fund into which a company sets aside money over time, for the repayment of debt instruments (fixed deposits, debentures, other loans) or the redemption of preference shares, or for replacement of assets.
A fund arising from particular taxes or other sources of revenue that is appropriated towards the payment of a government debt. Normally used in the issuance of revenue bonds or non-general obligation debt.
Financial reserves set aside to be used to redeem a bond or preferred stock issue to reassure investors that the company will be able to meet that obligation.
To spread the burden of major capital expenditure on a building, the tenant may be required to contribute regular periodic amounts, either in addition to or inclusive within the service charge to be collected as a separate fund which will be used to cover the eventual cost. Tenants need to be assured that the fund is effectively ring-fenced so that the landlord cannot spend the accumulated funds before they are due to be used. The funds held by the landlord are likely to be subject to trust under section 42 Landlord and Tenant Act 1987.
Fund set aside for periodic payments, aimed at reducing a financial obligation taken out to buy real estate, or to accumulate enough funds to buy property or for plant expansion. The principal deposited into the sinking fund earns interest. The total amount accumulated is then used for the desired purpose.
Money set aside on a periodic basis to retire term bonds at or prior to maturity.
The repayment of debt by an issuer at stated regular intervals through purchases in the open market or drawings by lot.
A fund established by a corporation into which money is regularly deposited so that the corporation has the funds to redeem its bonds, debentures, or preferred stock.
A fixed amount or portion of earnings that an issuer sets aside each year sufficient to provide for the eventual payment of part or all of an issue of bonds or preferred stock. Sinking funds are typically operated by periodically calling portions of the security issue (see the discussion of callable bonds) or by repurchases in the open market.
A fund in which equal monthly or annual deposits, with compound interest, accumulate to a predetermined amount at a calculated time, for the purposes of paying a debt or replacing improvements.
Where a bond is redeemed in instalments over its life, by means of bonds being repurchased prior to final maturity in the market at the current market price. See also Purchase Fund and Bullet Form.
Each apartment owner will contribute to a sinking fund for his or her block. This is a sum of money set aside for major repairs and renovation. This sum of money may be refunded should the owner sell on.
money paid into a fund to reduce a debt or loan, or to cover future anticipated expenses
Money that is accumulated in a separate custodial account for the purpose of redeeming debt securities or preferred stock issues.
A fund set up to retire most or all of a debt or preferred share issue over a period of time.
A fund created from the income of an income producing property which, with accrued interest, will eventually pay for replacement of the improvements.
