Refunded Bond


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".

BREAKING DOWN '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.

  1. Bond

    A debt investment in which an investor loans money to an entity ...
  2. Principal

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

    The process of retiring or redeeming an outstanding bond issue ...
  4. Escrow

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

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

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