Funding Operations

AAA

DEFINITION of 'Funding Operations'

  1. The process a government uses to swap out floating stock or short-term bonds for long-term bonds. Because floating stock does not guarantee payout or a fixed rate of interest, swapping it for funded debt (long-term bonds that carry a fixed rate of interest) introduces more stability into the government's financing of its national debt.
  2. The process a company uses to convert its capital funding from short-term to long-term debt instruments.

INVESTOPEDIA EXPLAINS 'Funding Operations'

In July of 2009, amid the lingering global credit crisis, Sheila Bair, Chairwoman of the Federal Deposit Insurance Corporation (FDIC) weighed in on the creation of a Financial Services Oversight Council to prevent a recurrence of the global economic meltdown and credit market freeze of 2007-2008. As part of the proposed Council's work, it was suggested that financial companies be subject to rules that would require them to issue short-term debt that would automatically convert to long-term debt under certain conditions such as during a liquidity crisis.

RELATED TERMS
  1. Bond

    A debt investment in which an investor loans money to an entity ...
  2. The Great Recession

    The steep decline in economic activity during the late 2000s, ...
  3. Federal Deposit Insurance Corporation ...

    The U.S. corporation insuring deposits in the U.S. against bank ...
  4. Fixed Income

    A type of investing or budgeting style for which real return ...
  5. Fixed-Income Security

    An investment that provides a return in the form of fixed periodic ...
  6. U.S. Treasury

    Created in 1798, the United States Department of the Treasury ...
RELATED FAQS
  1. What is a 'busted' convertible bond?

    In finance, a convertible bond represents a hybrid security that offers debt and equity features and risks. While a convertible ... Read Full Answer >>
  2. How does the risk of investing in the industrial sector compare to the broader market?

    There is increased risk when investing in the industrial sector compared to the broader market due to high debt loads and ... Read Full Answer >>
  3. How can I hedge my portfolio to protect from a decline in the retail sector?

    The retail sector provides growth investors with a great opportunity for better-than-average gains during periods of market ... Read Full Answer >>
  4. What is the correlation between term structure of interest rates and recessions?

    There is no question that interest rates have enormous macroeconomic importance. Many economists and analysts believe the ... Read Full Answer >>
  5. Who or what is backing municipal bonds?

    Municipal bonds are backed by dedicated taxes or revenue sources related to specific projects, or by the full faith and credit ... Read Full Answer >>
  6. What are the differences between debt and equity markets?

    The basic differences between the debt and equity markets include the type of financial interest they represent, the way ... Read Full Answer >>
Related Articles
  1. Bonds & Fixed Income

    3 Bonds You May Have Never Heard Of

    These lesser-known bonds may give your portfolio a boost when other investments products fall short.
  2. Bonds & Fixed Income

    The Advantages Of Bond Swapping

    This technique can add diversity to your portfolio and lower your taxes. Find out how.
  3. Options & Futures

    An Introduction To Corporate Bond ETFs

    Learn about the pros and cons of these specialized ETFs, and get in on the opportunities they can provide.
  4. Active Trading

    Buy Treasuries Directly From The Fed

    If you want government securities, go straight to the source. We'll show you how.
  5. Forex Education

    The Ins And Outs Of Corporate Eurobonds

    Corporate eurobonds simplify expansion for MNCs, though there are a few more hoops to jump through.
  6. Options & Futures

    Municipalities Free Up Cash With Chapter 9

    Find out what happens to municipalities when they need money, but have no other option than bankruptcy.
  7. Personal Finance

    10 Jobs to Avoid Right Now

    These jobs may never recover to pre-recession highs, can easily be outsourced overseas or may disappear altogether as technology intervenes.
  8. Bonds & Fixed Income

    What are Floating-Rate Notes?

    A floating-rate note is a debt instrument with an interest rate that “floats,” or varies. They are also called floaters.
  9. Investing

    Five Portfolio Moves For The Second Half

    After a relatively calm few months, market volatility is back. If you are an investor, we help you prepare your portfolio with these five portfolio moves.
  10. Economics

    6 Factors That Point to Global Recession in 2016

    We may be on the verge of another global recession.

You May Also Like

Hot Definitions
  1. Investopedia

    One of the best-known sources of financial information on the internet. Investopedia is a resource for investors, consumers ...
  2. Unfair Claims Practice

    The improper avoidance of a claim by an insurer or an attempt to reduce the size of the claim. By engaging in unfair claims ...
  3. Killer Bees

    An individual or firm that helps a company fend off a takeover attempt. A killer bee uses defensive strategies to keep an ...
  4. Sin Tax

    A state-sponsored tax that is added to products or services that are seen as vices, such as alcohol, tobacco and gambling. ...
  5. Grandfathered Activities

    Nonbank activities, some of which would normally not be permissible for bank holding companies and foreign banks in the United ...
  6. Touchline

    The highest price that a buyer of a particular security is willing to pay and the lowest price at which a seller is willing ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!