Advance refunding

Advance refunding,

Definition of Advance refunding:

  1. Arrangement in which new bonds are issued to repay previously issued bonds. The money realized from the sale of the new issue is invested in securities (usually government bonds) which are placed in escrow. The interest and principal payment from these securities is used in paying off the previously issued bonds.

  2. Advance refunding refers to the withholding of a new bond issue's proceeds for longer than 90 days before using them to pay off (refund) an outstanding bond issue's obligations.

  3. Advance refunding refers to the practice of taking the funds received from a new bond issuance to pay off a prior issue's debt. This can only occur after 90 days have passed. The issue of the new bond is, usually, at a lower interest rate than the older, unpaid obligation. Municipalities typically use advance refunding to lower borrowing costs and to take advantage of lower interest rates. .

How to use Advance refunding in a sentence?

  1. Advance refunding refers to the withholding of a new bond issue's proceeds for longer than 90 days before using them to pay off (refund) an outstanding bond issue's obligations.
  2. Municipalities typically use advance refunding to lower borrowing costs and to take advantage of lower interest rates.
  3. Advance refunding is most often used by governments seeking to postpone their debt payments, rather than having to pay off a large amount of debt when it's due.

Meaning of Advance refunding & Advance refunding Definition