refund investment & finance definition
To
replace debt before the original maturity date by issuing refunding bonds.
See refund in Wall Street Words
To retire securities with the funds that have been raised through the sale of a new security issue. Refunding usually occurs after a period of falling interest rates when firms issue new debt in order to retire existing debt having high coupon rates of interest. Refunding works to the disadvantage of existing bondholders, who must sell their securities before maturity (usually at a slight premium over face value) when proceeds can only be reinvested at a reduced yield. Also called
refinance. See also
call provision,
nonrefundable,
prerefunded bond.
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