Refunding


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Related to Refunding: Advance refunding, Refunding Bonds

Refunding

Redeeming a bond with proceeds received from issuing lower-cost debt obligations with ranking equal to or superior to the debt to be redeemed.

Refunding

The act or practice in which a company repays a bond by making a new issue of another bond. That is, a company refunds a bond when it borrows more money to repay the money it already owes to bondholders. One may think of refunding as the company refinancing a bond.
References in periodicals archive ?
The opportunity to realize savings through an advance refunding is determined by the interest rate on the refunded bonds, the interest rate on the escrow account and the interest rate on the refunding bonds.
The opportunity to realize savings through an advance refunding is determined by the nature, size and structure of the refunded bond issue.
The call feature can increase the likelihood of an economical advance refunding. Because the earnings rate cannot exceed the borrowing rate on the refunding issue, it is only economical to refund bonds that can be called.
The issue size also can increase the likelihood of an economical advance refunding. Because many of the issuance costs associated with a bond issue are not directly related to the size of the issue, an advance refunding of a large bond issue will produce relatively more savings than an advance refunding of a small bond issue.
The issue purpose also can increase the likelihood of an economical advance refunding. Generally, an advance refunding of a prior "new money" issue will produce more savings than an advance refunding of a prior advance refunding issue, since the latter must reflect the "transferred proceeds" penalty.