Crossover Refunding

DEFINITION of 'Crossover Refunding'

A local government's issuance of new municipal bonds (called refunding bonds) in which the proceeds of the refunding bonds are placed in escrow and used to make debt service payments on the refunding bonds until the call date of the original bonds. At that point, the refunding bond proceeds cross over and are used to pay the principal and the call premium, in order to extinguish the original bonds.

BREAKING DOWN 'Crossover Refunding'

When 90 days or fewer are left in the original bonds' terms, the refunding is called "current". When more than 90 days remain, the refunding is called "advance". Alternatives to a crossover refunding include net cash refunding, which is more common, and full cash or gross refunding, which is less common.


A locality might decide to refund its bonds in order to get a better interest rate, to get better debt covenants or to obtain a better debt service schedule.

RELATED TERMS
  1. Refunded Bond

    Bonds that have their principle cash amount already held aside ...
  2. Tax Refund

    A tax refund is a refund on taxes paid to an individual or household ...
  3. Tax Refund Anticipation Loan - ...

    A loan provided by a third party against a taxpayer's expected ...
  4. Advance Refunding

    1. A bond issuance used to pay off another outstanding bond. ...
  5. Refunding

    The process of retiring or redeeming an outstanding bond issue ...
  6. Intaxification

    The feeling of satisfaction and joy that a tax refund creates ...
Related Articles
  1. Budgeting

    9 Ways To Use A Tax Refund

    How do you plan to spend your refund this year? We provide some smart suggestions.
  2. Taxes

    IRS Refund Lost? Here's What to Do

    Don't panic. There are a number of reasons your refund might be delayed – and solutions for each.
  3. Taxes

    The First Thing You Should Do With Your Tax Refund

    Nobody likes to pay taxes, but everyone loves to get a tax refund. When the check arrives in the mail, it's hard to resist spending it on some indulgence.
  4. Professionals

    Refunding

    CFA Level 1 - Refunding, Prepayments and Sinking Fund Provisions. Learn the various ways a bond can be refunded. Shows how prepayments and a sinking fund provision can retire a bond early.
  5. Budgeting

    Uncle Sam's Ingratitude

    How do you plan to spend your refund this year? We provide some smart suggestions.
  6. Taxes

    6 Tax Myths Everyone Should Know

    There are many tax myths that have grown out of general tax confusion. Learning about them can help you avoid costly mistakes.
  7. Budgeting

    10. I always get a raise/bonus/tax refund.

    Putting 10 budget myths in their place
  8. Taxes

    12 Reasons Your IRS Refund Was Late

    A tax refund can be a nice post-tax reward, but if it's taking too long to arrive, here are the most likely reasons for the hold-up and how to check on it.
  9. Bonds & Fixed Income

    When Your Bond Comes Calling

    Callable bonds can leave investors with a pile of cash in a low-interest market. Find out what you can do about it.
  10. Investing Basics

    3 Ways to Invest Your Tax Refund

    Investing your tax refund is a smart way to reach your financial goals. But depending on what you want to achieve, investment styles may differ.
RELATED FAQS
  1. How do I get a split tax refund?

    You don't have to receive your tax refund in a lump sum. Learn the options you have for splitting the money the IRS owes ... Read Answer >>
  2. What are the benefits of splitting my tax refund?

    If you receive a refund when you file your tax return, there are some convenient options you can take advantage of. Read Answer >>
  3. Can the IRS withhold your tax refund?

    Learn about the instances in which the IRS can levy your federal and state income tax refunds, and find out how the levy ... Read Answer >>
  4. When should my tax refund arrive?

    Read about how long it takes the IRS to process your income tax return and what factors could delay receiving your tax refund. Read Answer >>
  5. A corporate bond I own has just been called by the issuer. How can a company legally ...

    Bond issues can contain what is referred to as a call provision, which is a right afforded to the issuing company enabling ... Read Answer >>
  6. Where can I buy government bonds?

    The type of bond determines where you can purchase it, so you need to decide which type of bond you would like to purchase ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center