sinking fund


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sinking fund,

sum set apart periodically from the income of a government or a business and allowed to accumulate in order ultimately to pay off a debt. A preferred investment for a sinking fund is the purchase of the government's or firm's bonds that are to be paid off. Usually the fund is administered by a trustee. See amortizationamortization
, reduction, liquidation, or satisfaction of a debt. The term amortization may also refer to the sum used for that purpose. The term is commonly used in ascertaining the investment value of securities.
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sinking fund

[′siŋk·iŋ ‚fənd]
(industrial engineering)
A fund established by periodically depositing funds at compound interest in order to accumulate a given sum at a given future time for some specific purpose.
References in periodicals archive ?
Forecast-price valuations require a valuer to model capital recovery in such a way as to ensure that by the end of the forecast period the sinking fund will be adequate to provide for the purchase of a replacement property (similar in terms of its performance and income-producing potential to the subject) at expected new, and usually higher, prices.
But the energy official said that they have yet to peg a suitable figure for the sinking fund, which should be sufficient enough to pay for the necessary costs to remove whatever needs to be removed after a company ceases operations in a particular oil or gas field.
Residents claim the sinking fund is short of pounds 232,000 because of mistakes in Anchor Trust's management.
A company that needs to borrow should consider issuing sinking fund bonds.
Exhibit 2 compares the contingent sinking fund structures for the five-year ISFDs and the ten-year ISFDs.
Each scenario incorporated a sinking fund for asset replacement.
The provisions of a typical sinking fund require the issuer to retire fixed principal amounts before maturity.
Sinking fund mechanisms, including a requirement that districts remit payments to the trustee 15 days before sinking fund and debt service payments are due, create a pre-default intercept.
Fitch notes that sinking fund mechanisms, with payments due to the trustee 15 days before sinking fund and debt service payments and ensuring a pre-default intercept, are present.
Moreover, the Gouvernement du Quebec has established the Generations Fund, a sinking fund for retirement of outstanding debt funded by royalties on hydropower generation, among other funding sources.
Littlefield does not levy an interest and sinking fund tax for its general obligation debt, relying on water and sewer system support for the series 1997 COs and detention center fund revenues to provide the debt service on the remainder of the city's outstanding CO debt ($10.
Certain maturities of the 2006 series A bonds are subject to mandatory sinking fund redemptions.