Mandatory Sinking Fund Payment Sample Clauses

A Mandatory Sinking Fund Payment clause requires the issuer of a debt security to make regular, scheduled payments into a sinking fund, which is used to retire portions of the outstanding debt before maturity. Typically, these payments are set at fixed intervals and amounts, and may involve the issuer redeeming a specified portion of bonds each year, either by purchasing them on the open market or calling them from bondholders at a predetermined price. This clause ensures that the issuer systematically reduces its debt over time, thereby lowering default risk and providing bondholders with greater security regarding repayment.