A bond issued in exchange for outstanding bonds when a corporation facing bankruptcy is recapitalized.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
See income bond.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.