funnel sinking fund

funnel sinking fund

A special type of bond retirement system in which an issuer has the option to make all its outstanding bonds subject to one annual sinking fund requirement. Thus, the issuer may take the annual sinking fund requirements for all outstanding issues and concentrate them into retiring an unusually large amount of a high-coupon issue. A funnel sinking fund generally operates to the disadvantage of bondholders and to the advantage of the issuer.
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.
Mentioned in ?