What is a taxable advance refunding?

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. The Tax Cuts and Jobs Act (TCJA) repealed the exclusion from gross income for interest on bonds issued to advance refund another bond.

What is the difference between a current refunding and advance refunding?

A current refunding is one in which the outstanding (refunded) bonds are redeemed within 90 days of the date the refunding bonds are issued. In an advance refunding, the refunded bonds are redeemed more than 90 days from the date the refunding bonds are issued.

What is meant by refunding debt?

What Is Refunding? In corporate finance and capital markets, refunding is the process where a fixed-income issuer retires some of their outstanding callable bonds and replaces them with new bonds, usually at more favorable terms to the issuer as to reduce financing costs.

What is forward refunding?

In a forward refunding, an issuer and an underwriter agree that the issuer will issue refunding bonds on a specified date in the future, and the underwriter will purchase those bonds on that date at a specified price.

What is deferred amount on refunding?

[1] Deferred Amount on Refunding is the difference between: Reacquisition price is the amount required to repay previously issued debt in a refunding transaction. In a current refunding, this includes principal of the old debt and any call premium.

What is unfunded debt?

While funded debt is a long-term borrowing, unfunded debt is a short-term financial obligation that comes due in a year or less. Many companies that use short-term or unfunded debt are those that may be strapped for cash when there isn’t enough revenue to cover routine expenses.

What is a crossover refunding?

Crossover refunding refers to the issuing of a new bond where the proceeds are placed in escrow to redeem a previously issued higher-interest bond.

What is a refunding bond and release?

Many of the releases signed when estate distributions are made are called “Receipt, Release and Refunding Bond”. It is a legal document in which you as the heir would acknowledge receipt of a distribution, release (no claims) against the personal administrator and then agree to refund or return the money if necessary.

What is a bond refund?

Bond refunding is a corporate action whereby funds procured from investors are repaid to them with the help of newly issued bonds, i.e., the company repays old bondholders with the money received from new bondholders.

Are pension liabilities considered debt?

Pension liabilities can be senior or at par with unsecured financial liabilities, but in no case are they junior to financial debt. Like interest payments, failure to meet minimum pension contributions can trigger bankruptcy.

What is the difference between debt and funded debt?

Funded debt is a company’s debt that matures in more than one year or one business cycle. This type of debt is classified as such because it is funded by interest payments made by the borrowing firm over the term of the loan. Funded debt is also called long-term debt since the term exceeds 12 months.

What is a crossover bond?

Simply stated, cross- over bonds generally refer to corporate securities that are rated close to the di- viding line between invest- ment-grade and high-yield debt. For many fixed-in- come investors, crossover bonds occupy the “sweet spot” because they offer rel- atively high yields and low default rates.