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 Says:
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:
Advance Refunding
Bond
Escrow
Municipal Bond
Principal
Refunding |