Bailout Bond


DEFINITION of 'Bailout Bond'

A debt security issued by the Resolution Funding Corporation to bail out the savings and loan associations during the financial crisis of the late 1980s and early 1990s. The bailout bonds had zero-coupon Treasury bonds backing the principal amounts, making the instruments a safe investment.

BREAKING DOWN 'Bailout Bond'

In the mid 1990s, after the savings and loan associations recovered from its crisis, bailout bonds were no longer issued. Because the bonds were backed by Treasury securities, the yields were only marginally better than those of similar T-bonds.

  1. Bank Levy

    1) A type of taxation system on financial institutions, in which ...
  2. Risk-Free Asset

    An asset which has a certain future return. Treasuries (especially ...
  3. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with ...
  4. Zero-Coupon Bond

    A debt security that doesn't pay interest (a coupon) but is traded ...
  5. Bailout

    A situation in which a business, individual or government offers ...
  6. Government Security

    A bond (or debt obligation) issued by a government authority, ...
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