sinking fund

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Related to sinking funds: amortization, Call provision

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 ?
I would like to use this as an example of forward thinking and financial planning that transfers seamlessly into the world of property management through the operation of the humble sinking fund.
In addition, the authority's loans to clients, which the debentures finance, rely on a sinking fund structure whereby the borrowers make regular amortization payments.
The funding act that passed on February 25, 1862, instructed the Secretary of the Treasury to set aside the annual surplus from custom revenues for the establishment of a sinking fund to retire at least 1 percent of outstanding U.S.
The debt is a 12-year balloon note that requires LISD to set up an interest and sinking fund. Over the life of the note, LISD is expected to pay $1,056,000 in interest payments, but the note is expected to earn $2,488,769 in interest earnings in the sinking fund over the same period.
As you may or may not recall, the sinking-fund formula for a sinking fund in which the deposit is made at the end of the period is:
But the advantages to indexing principal repayments are less obvious, at least partly because in most cases corporate issuers retain some flexibility to increase principal repayments in response to decreases in interest rates either by making optional redemptions or by exercising the option (when it is available) to "double up" on sinking fund payments.
"The reserve fund or the sinking fund is a yearly amount that accumulates, which is based on a study by a third-party consultant," says Nwilati.
The region has EUR271 million provisioned in sinking funds for bonds with bullet repayment and average liquidity is expected to remain at around EUR200 million.
Other writings presented include the Social catechism (1784), Replies to the principal objections that can be made against a single tax (1789), Reflections on the issue of assignats (1790), The New system of taxation established by the national assembly of France in 1791 (1791), and Theoretical considerations about sinking funds of public debt (1801).
It examines the relationship between bond ratings, sinking funds, quality-differentiated audits, and measures of bond interest cost.
Section I of this paper presents some summary statistics on sinking funds provisions and on the prevalence of prepurchases.
5) Use Sinking Funds to pay for big purchases/payments.