Refunded bond

(redirected from Prerefunded Bonds)

Refunded bond

Also called a prerefunded bond, a bond that originally may have been issued as a general obligation or revenue bond but that is now secured by an escrow fund consisting entirely of direct U.S. government obligations that are sufficient for paying the bondholders.

Refunded Bond

A bond whose principal is held in an escrow account, generally invested in Treasury securities or something else risk-free, until such time as the bond matures. That means that there is no possibility of default on the principal; as a result, refunded bonds usually have the highest possible credit ratings. They are also called prerefunded bonds.
References in periodicals archive ?
Insured or prerefunded bonds also limit credit risk.
NEW YORK -- Due to an oversight, certain recent rating actions performed on prerefunded bonds did not assign a Negative Rating Outlook.
Due to this change in bond security, previous ratings assigned to bonds are no longer relevant and if escrows are properly structured, prerefunded bonds may qualify for an 'AAApre' rating from Fitch," said David Litvack, Managing Director and Chair of Fitch's Public Finance Criteria Committee.