Bond sinking fund,

Definition of Bond sinking fund:

1. A fund formed by periodically setting aside money for the gradual repayment of a debt or replacement of a wasting asset.

2. When a bondholder is close to defaulting on the bond, the company will buy the bond back to avoid further debt incurring on the security.

How to use Bond sinking fund in a sentence?

1. In each period a certain percentage of gross output is set aside into a sinking fund for depreciation and replacement; this percentage is based on the length of life of machines, which is assumed to be given and constant.