super sinker bond

A bond with long-term coupons coupled with a short-term maturity. Such a bond is often used to finance home purchases. Super sinker bonds are often used when mortgages backing the bonds get prepaid, making it likely for the bond to be paid off soon. Although the bond holder does not know exactly when the pay-off may occur, the annual return on these bonds is high over the short-to-medium-term holding periods.