A bond that promises to pay interest only when earned by the issuer; failure to pay interest does not result in default.
A long-term debt security in which the issuer is required to pay interest only when interest is earned. This rare security, issued principally as part of a corporate reorganization, offers an investor a relatively weak promise of payment. Some issues require that unpaid interest be accumulated and made up in periods that earnings permit.
A corporate debt issue that pays interest only when, and if, the company has income. Also called an Adjustment Bond.