accrual bond

Definition of "accrual bond"
  1. An accrual bond pertains to a category of security (often the final portion of a collateralized mortgage obligation) that does not make any principal or interest payouts until all previous portions are completely paid off. It is sometimes referred to as a Z-bond
How to use "accrual bond" in a sentence
  1. The mortgage bank issued an accrual bond as the last portion of their new collateralized mortgage obligation.
  2. As an accrual bond investor, he does not receive any payments until all the senior tranches are paid in full.
  3. Due to their structure, accrual bonds don't make any payouts for interest or principal until complete payout of the initial tranches is achieved.

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