income bond

Also found in: Dictionary.
Related to income bond: convertible bond, junk bond

Income bond

A bond whose payment of interest is contingent on sufficient earnings. These bonds are commonly used during the reorganization of a failed or failing business.

Income Bond

A bond in which the issuer is only responsible for making coupon payments when it has sufficient income to do so. Income bonds are most common in reorganization plans in which the issuer is attempting to maintain operations in bankruptcy. An income bond is useful for the issuer because it provides capital quickly. However, it can be disadvantageous for the bondholder because there is little or no guarantee of repayment. As a result, income bonds are relatively rare securities.

income bond

A long-term debt security in which the issuer is required to pay interest only when interest is earned. This rare security, issued principally as part of a corporate reorganization, offers an investor a relatively weak promise of payment. Some issues require that unpaid interest be accumulated and made up in periods that earnings permit. Also called adjustment bond.
References in periodicals archive ?
HSBC Holdings (LSE: HSBA) has said that it has launched a Singapore-dollar income bond for local retail investors.
The Regular Income Bond is a six-year investment that is linked to the FTSE.
The Wizard prices both accrual bonds (Series I, EE, E and savings notes) and current income bonds (Series HH and H).
The group is also reducing the returns paid on its variable rate savings products, such as its cash mini ISA, easy access savings account and income bonds, by up to 0.
For these people the Guaranteed Income Bond is suddenly the safest port in a storm.
The only investment that gives income with a cast iron capital guarantee is of course National Savings but again rates are pretty unattractive with their Income Bond paying 6 per cent.
NS&I is scrapping Pensioner Guaranteed Income Bonds and Capital Bonds.
A stockmarket income bond is the type of bond which pays a fixed income for a set term (unless you go for a growth option) and repays capital depending on the performance of the stockmarket.
At the same time, Abbey's latest Guaranteed Income Bond, the ninth, promises guaranteed fixed income of 3.
ACONSIDER a Secure Income bond that offers a guaranteed income and can return your original capital at the end of the term of the bond.
Once you have invested in a Guaranteed Income Bond the in-come level will not change irrespective of what happens to interest rates.