The repayment of bonds is paid from the issuer's future income, but in order to ensure the maturity of bonds or the holder's request for early payment under special circumstances, some governments or companies have also set up special sinking funds.
The national sinking fund is generally arranged from the national budget, and there are two main ways to form the company sinking fund: one is to withdraw according to a fixed amount or a certain proportion of issued bonds; The second is to extract according to a certain proportion of after-tax profits or sales revenue.
Some companies must set up sinking funds when issuing bonds according to relevant laws and regulations, and some companies include setting up sinking funds as one of the issuance conditions in bond issuance contracts to enhance the attractiveness of bonds issued to investors.
Extended data
The debt relief fund system is widely used in western countries, but the debt relief fund in some countries is only an institutional existence and has not played a role in reality. For example, in order to adjust the national debt accumulated in the First World War in a planned way, the United States established the annual expenditure authority of debt repayment through the war loan law of 19 19, and later confirmed it by law.
With the second world war, the balance of national debt increased greatly, and the government changed the debt reduction fund into a policy of borrowing new and returning old, and the debt reduction fund was ineffective.
In some countries, there are only a few special debt relief funds, but these special debt relief funds are not important; Some countries have special debt repayment funds or vaults, that is, part of the excess fiscal revenue is used to reduce the collection of credit funds or repay debts.
Debt relief funds are relatively perfect in Japan. In addition to debt reduction funds for corporate bonds, the Special Accounting Law for Debt Reduction Funds for National Debt also stipulates the establishment of debt reduction funds. The current debt reduction fund system formed by 1967 stipulates the payment of financial resources and the transfer of repayment funds.
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