Baby bond

Baby bond

A bond with a par value of less than $1000.

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baby bond

A bond that has a principal amount under $1,000. Baby bonds may be issued by firms hoping to attract investors who do not have funds to purchase bonds with $1,000 principal. On occasion, bonds of less than $1,000 principal are issued as part of a corporate refunding. Because baby bonds are unusual, they may be more expensive to trade.

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Baby bond. Bonds whose par values are less than $1,000 are often described as baby bonds, or, in the case of municipal bonds, as mini-munis.

Small companies that may not be able to attract institutional investors, such as banks and mutual fund companies, may offer baby bonds to raise cash from individual investors.

Some municipalities also use baby bonds to foster involvement in government activities by making it possible for more people to invest.