A sinking fund reduces credit risk by spreading repayment over time instead of leaving a single large balloon at maturity. That shortens the effective life of the issue and lowers its duration relative to a bullet with the same final date.
It also creates a small lottery. If the issuer redeems by random draw at par and the bond trades above par, some holders are redeemed early at a loss relative to market. Average life, not stated maturity, is the right measure for these bonds.
Example: a $500 million issue must retire $50 million a year from year five. By final maturity only $50 million remains outstanding, and the average life is roughly 7.5 years rather than the stated 10.
Related: callable-bond, duration, maturity, bond-indenture, corporate-bond