adjustment bond

Adjustment bond

A bond issued in exchange for outstanding bonds when a corporation facing bankruptcy is recapitalized.

Adjustment Bond

A bond that a company issues to its current bondholders in exchange for its previously issued bonds. An adjustment bond usually offers less favorable terms to bondholders, such as lower coupon rates, and is usually issued when the company is in danger of bankruptcy and is unlikely to be able to make payments on the previous bonds. An adjustment bond can be good for the company because it can help avoid bankruptcy; it can also be beneficial to bondholders in the long term because it may make more from the adjustment bond than it would if the company's assets were liquidated.

adjustment bond

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