Refunded Bond

AAA

DEFINITION of 'Refunded Bond'

Bonds that have their principle cash amount already held aside by the original issuer of the debt. A subset of the municipal and corporate bond classes, the funds required to pay off refunded bonds are held in escrow until the maturity date, usually by purchasing Treasury or agency paper.

Also known as "prerefunded bonds".

INVESTOPEDIA EXPLAINS 'Refunded Bond'

Refunded bonds will typically be 'AAA' rated due to the cash backing and, as such, will offer little premium to equivalent-term Treasuries. The date of refunding will usually be the first callable date of the bonds.

RELATED TERMS
  1. Escrow

    A financial instrument held by a third party on behalf of the ...
  2. Bond

    A debt investment in which an investor loans money to an entity ...
  3. Municipal Bond

    A debt security issued by a state, municipality or county to ...
  4. Refunding

    The process of retiring or redeeming an outstanding bond issue ...
  5. Principal

    1. The amount borrowed or the amount still owed on a loan, separate ...
  6. Advance Refunding

    1. A bond issuance used to pay off another outstanding bond. ...
Related Articles
  1. The Basics Of Municipal Bonds
    Bonds & Fixed Income

    The Basics Of Municipal Bonds

  2. What is the difference between municipal ...
    Investing

    What is the difference between municipal ...

  3. Bond Basics Tutorial
    Retirement

    Bond Basics Tutorial

  4. Introduction To Commercial Paper
    Bonds & Fixed Income

    Introduction To Commercial Paper

comments powered by Disqus
Hot Definitions
  1. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  2. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  3. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  4. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  5. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  6. 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 ...
Trading Center