Baby Bond

Fixed income securities issued in small denominations, generally with a maximum face value of $5,000. The small denominations enhance the attraction of baby bonds to the average retail investor.

Baby bonds are now issued mainly by municipalities, counties and states to fund expensive infrastructure projects and capital expenditures. These tax-exempt municipal bonds are generally structured as zero-coupon bonds with a maturity of between eight and 15 years.

Baby bonds may also refer to a series of small denomination bonds with face value ranging from $75 to $1,000, issued by the U.S. government from 1935 to 1941. These tax-exempt bonds were sold at 75% of face value and had a maturity of 10 years.

In the U.K., baby bonds refer to a type of bond launched in the late 1990s with the objective of stimulating savings for children by their parents. Parents had to make small monthly contributions for at least 10 years; in return, the child received a guaranteed minimum amount tax-free upon turning 18.


Investment dictionary. . 2012.

Look at other dictionaries:

  • baby bond — see bond 2 Merriam Webster’s Dictionary of Law. Merriam Webster. 1996 …   Law dictionary

  • baby bond — A bond with a par value of less than $1000. Bloomberg Financial Dictionary * * * baby bond baby bond ➔ bond * * * baby bond UK US noun [C] FINANCE ► an investment plan for children in the UK that begins at birth and whose purpose is to provide… …   Financial and business terms

  • baby bond — noun : a bond having a face value of $10, $25, $50, or $100 as distinguished from one of $500 or $1000 called also small bond * * * baby bond noun (informal) A special savings scheme for children • • • Main Entry: ↑baby * * * baby bond, U.S.… …   Useful english dictionary

  • baby bond — noun any bond, issued with a value less than $1,000, intended for small investors …   Wiktionary

  • baby bond — 1) A type of bond offered by tax exempt Friendly Societies; it produces maturing funds for an infant over a minimum period of 10 years. Under current UK rules, up to £25 a month (or £270 a year) may be invested tax free. 2) See: Child Trust Fund …   Accounting dictionary

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  • Bond — Bonds are debt and are issued for a period of more than one year. The U.S. government, local governments, water districts, companies and many other types of institutions sell bonds. When an investor buys bonds, he or she is lending money. The… …   Financial and business terms

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