A sinking fund is a fund containing money set aside or saved to pay off a debt or bond. A company that issues debt will need to pay that debt off in the future.A. A secured debt will have higher coupon than a debenture, all else equal. A sinking fund call is a provision that allows a bond issuer to buy back its outstanding bonds before their maturity date at a pre-set price. If possible put 5 percent of net income into your sinking fund, i prefer to call it an emergency fund. 1694, when twelve million pounds were borrowed from the Bank of England in consideration of its charter. Sinking funds; how kept and invested; income therefrom and application thereof. 16. Excess monies in such sinking fund shall be used to pay the debt. (a) The Trustee shall pay out of the Debt Service Fund established in connection with Bonds of a. You can also use one to prepare for expected-but-not-planned-for expenses (like car repairs) that are sure to come in the future.