Refunding

Refunding[1] occurs when an entity that has issued callable bonds calls those debt securities from the debt holders with the express purpose of reissuing new debt at a lower coupon rate. In essence, the issue of new, lower-interest debt allows the company to prematurely refund the older, higher-interest debt.

On the contrary, non-refundable bonds may be callable but they cannot be re-issued with a lower coupon rate—they cannot be refunded.

## See also

* Refinancing

## References

1. ↑ "Refundings and Redemption Provisions". https://www.msrb.org/sites/default/files/Refundings-and-Redemption-Provisions.pdf.

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