In a fungible issue, it is a new bond that is issued “further” to an existing issuance of bonds (parent bond), but as separate tranches. Eventually these tranches will be merged or ‘funged’ into existing bonds of the same issuer, with features and terms and conditions that are identical to the existing ones in all respects excluding the issue date and/ or issue price. The parent bond is interchanged into its fungible bond.
Funged bonds (fungible bonds) trade immediately after an issue is announced. In a bond funge (a bond issue that is attached to an existing one (parent bond), the parent bond, on a defined date, absorbs the funged bond.
