Low-coupon bond refunding

(redirected from Low Coupon Bond Refunding)

Low-coupon bond refunding

Refunding of a low-coupon bond with a new, higher-coupon bond.

Low-Coupon Bond Refunding

The act of an issuer redeeming a bond with a low coupon and replacing it with a bond with a higher coupon. For example, one may wish to give a company back a bond, receive the principal amount, and buy a bond with a higher interest rate in order to receive a greater return. It is important to note that not all bond indentures allow such premature redemption.