Series 50: Methods Of Refunding

Methods of Refunding

There are several ways to manage the transition from the refunded bonds to the refunding bonds. One method is a full cash refunding (also called a gross refunding), in which the issuer simply immediately begins using the proceeds from the refunding bonds (supplemented by other funds if needed) to pay the debt service on the refunded bonds, until the refunded bonds either mature or are able to be called. At the same time, the funding stream that was paying the refunded bonds will begin repaying the refunding bonds instead.

A net cash refunding works like full cash refunding, except that the funds dedicated to servicing the refunded bonds are invested