Refunding
Refunding is a situation that occurs when a company issues debt at current low rates and uses the proceeds to repurchase one of its existing high–coupon rate debt issues. Often these are callable issues, which means the company can purchase the debt at a call price lower than the market price.
Definitions
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- Refunding. Occurs when a company issues debt at current low rates and uses the proceeds to repurchase one of its existing high–coupon rate debt issues. Often these are callable issues, which means the company can purchase the debt at a call price lower than the market price.
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
