Refunded bond

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 ?
The "AAA" rating reflects the fact that the refunded bonds are secured by an irrevocable escrow composed of direct, noncallable obligations of the U.
29, 2007, with proceeds of the corporation's tobacco settlement asset-backed bonds, series 2007-1 and amounts held in accounts previously securing the refunded bonds.
The refunded bonds are now secured by an irrevocable escrow of noncallable U.
The refunded bonds will be redeemed on July 1, 2008 at 101%.
Ernst & Young has verified the mathematical accuracy of the computations showing that the escrowed securities plus a small initial cash deposit will be sufficient to pay interest, principal and the redemption price of the refunded bonds to their respective call dates.
27, 2005 with proceeds of the Agency's tobacco settlement asset-backed bonds (Sonoma County Securitization Corporation) series 2005 and funds held under the indenture previously securing the refunded bonds.
The refunded bonds include $10 million of the Series 1983 bonds maturing on Jan.
The escrowed funds are pledged for the purpose of paying interest and redemption price on refunded bonds.
The escrow holder, The Bank of New York, holds a separate irrevocable trust fund for the purpose of paying principal, interest and any redemption premium, when due, on the tax-exempt refunded bonds.
verified the mathematical accuracy of computations of the adequacy of initial investments and cash deposited to pay the debt service requirements of the refunded bonds.
The escrow holder, The Bank of New York, holds separate irrevocable trust funds for the purpose of paying principal, interest and redemption premium, when due, on the refunded tax-exempt bonds and taxable refunded bonds, respectively.
The escrow agent has been directed to use this fund for the purpose of paying principal, interest and redemption premium, when due, on the refunded bonds.