Refunding of Bonds
The process of retiring outstanding bonds and issuing new ones is called refunding. Bond refunding may or may not involve an early redemption. Refunding is similar to a homeowner refinancing her mortgage. When interest rates fall, the homeowner refinances to replace her current mortgage with a new mortgage at a lower rate. Similarly, when interest rates fall, a company may issue new bonds, called refunding bonds, at a lower rate. The proceeds of the refunding bonds have the sole
