Refunded bond

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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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
Insured or prerefunded bonds also limit credit risk.
Credit risk can be reduced by avoiding unrated bonds, by investing in insured or prerefunded bonds or by diversifying purchases across several issuers.