Definition of baby bond

bond having a par value of less than $1,000, usually $500 or $25. Baby bonds bring the bond market within reach of small investors and, by the same token, open a source of funds to corporations that lack entree to the large institutional market.

convertible or straight debt bond having a par value of less than $1000, usually $500 to $25. Baby bonds bring the bond market within reach of small investors and, by the same token, open a source of funds to corporations that lack entree to the large institutional market. On the negative side, they entail higher administrative costs (relative to the total money raised) for distribution and processing and lack the large and active market that ensures the liquidity of conventional bonds.