debt retirement

The act of repaying debt. This may be accomplished by recalling notes and bonds that have been issued and returning the principal to those who have purchased the debt. Often debt is retired by creating a sinking fund when the debt is issued. The issuer deposits a certain amount of money received from the debt issue into the sinking fund. When the debt has to be repaid, the funds are available. Another debt retirement method is issuing serial bonds, which requires the debt to be retired at different times according to a schedule.