Security fund bond (sinkable bond)

The issuer of a bond issue sets up a sinking fund that is usually fed by current income from business activities; this secures the servicing of the bond (a special type of bond that a company will issue that is backed by a sinking fund, which sets aside money on a consistent basis in order to ensure investors that principal and interest payments will be paid out as promised). As a rule, such securities also carry a lower interest rate because of the lower risk for the investor. – See bond, secured.

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