Definition for : Fungibility

Fungibility is the possibility for the issuer to issue at a later stage, other bonds with the same features (time to Maturity, Coupon rate, Coupon payment schedule, Redemption price and guarantees, etc.). Fungibility, or Interchangeability, enables the various issues to be grouped as one, for a larger total amount. Fungible bonds offer two advantages: administrative Expenses are reduced, since there is just one issue; and more importantly, the bonds are more liquid and therefore more easily traded on the Secondary market.

(See Chapter 21 Other debt products of the Vernimmen)

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