High-coupon bond refunding

(redirected from High Coupon Bond Refunding)

High-coupon bond refunding

Replacing a high-coupon bond with a new, lower-coupon bond.

High-Coupon Bond Refunding

A bond that retires another bond before the earlier bond matures in order to take advantage of a lower coupon rate. A company issues a high-coupon refunding bond after a decline in interest rates, which reduces the cost of funding. Refunding the bond deprives bondholders of the first bond from future coupon payments to which they would otherwise of have been entitled. See also: Interest Rate Risk.