Net Cash Refunding

The most common type of Refunding. In such a transaction, the Refunding Bond proceeds, together with Interest earnings thereon, are structured to produce sufficient funds to pay the Principal and Interest on the Refunded Bonds until the Redemption or maturity of the Refunded Bonds, whichever is earlier, and also to pay the Redemption Premium, if any, on the Refunded Bonds on the date of Redemption. This contrasts with a “gross refunding” where the initial deposit of the Refunding Bond proceeds is sufficient to pay all of the Principal, Interest and Redemption Premium, if any, of the Refunded Bonds until the Redemption or Maturity of the Refunded Bonds, whichever is earlier, and anticipated Interest earnings are not taken into account.

See Also


A transaction in which refunding bonds are issued and their proceeds are used to pay off outstanding bonds.

Advance Refunding

A type of refunding transaction in which the refunding bonds are issued more than 90 days before the redemption or final maturity, whichever is earlier, of the refunded bonds.

Current Refunding

A refunding in which all refunded Bonds are redeemed within ninety days of the issuance of the refunding bonds.

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Securities Act of 1933

Law designed to ensure that investors are provided with material information about new issues of securities offered for sale to the public.