Indexed Bond Law and Legal Definition

Indexed bond is a bond whose payments are linked by an index (such as a consumer-price index). In an indexed bond, obligation with interest payments tied to an inflation index. If price levels rise, the rate of bond interest is adjusted accordingly.

The following is an example of a case law referring to indexed bond:

Indexed bonds are meant to give both a yield and an ultimate principal payback that are adjusted for inflation. The interest on such bonds would be highly significant evidence of the inflation-free time value of money. [Ramirez v. New York City Off-Track Betting Corp., 112 F.3d 38, 41 (2d Cir. N.Y. 1997)].