Refunded Bond

Posted in Finance, Accounting and Economics Terms, Total Reads: 226

Definition: Refunded Bond

A refunded bond is a new bond that is issued to retire a previously issued bond. These refunding bonds may then be sold for cash or exchanged for the older bonds. Another way of stating the same would be that a refunded bond is a bond which has its principle set aside by the issuer of the debt.

These are extremely safe bonds and are usually rated as “AAA” since the backing of the cash often offer little premium to Treasuries of equivalent terms. It is defined by its date of refunding which is usually the date of the first callable day.

Another name for them is prefunded bonds. 


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