BABY BOND

It is a fixed income type of securities that are issued in small denominations, commonly having the maximum $5000 face value. Because it is issued in small denominations, average retail investors are easily attracted to this.

Nowadays, baby bonds are mainly issued by different states, counties and municipalities to fund capital expenditures and expensive infrastructure projects. These municipal bonds that are tax-exempted are commonly structured as zero-coupon bonds having a maturity from eight to 15 years.