Sour bond

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Sour bond

A bond issue that has defaulted on interest or principal payments, and will thus trade at a large discount and a poor credit rating.

Sour Bond

A bond that has missed a scheduled coupon payment or has not paid the full principal at maturity. Because the sour bond is in default, it trades at a significant discount from its par value. There is a high risk that the buyer of a sour bond will not recover his/her investment, but if the bond is eventually repaid, he/she can receive a high return.