LeoGlossary: Delinquent Bonds

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Delinquency occurs when a bond issuer fails to make a payment or perform an action required under the debt contract. While delinquent bonds may technically be in default, the term is most commonly used to represent near-term missed payments rather than long-term non-payment.

For example, a municipality may have a temporary budget shortfall that limits its working capital and makes it 30-days delinquent on payments to bondholders. The bond is considered a delinquent bond, while an ongoing failure to pay may result in a default.


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