re·fund (rĭ-fŭnd', rē'fŭnd') v.
re·fund·ed, re·fund·ing, re·funds
v.
tr. To give back, especially money; return or repay: refunded the purchase price. v.
intr. To make repayment. n.
(rē'fŭnd')
A repayment of funds.
An amount repaid.
[Middle English refunden, from Old French refunder, from Latin refundere : re-, re- + fundere, to pour; see gheu- in Indo-European roots.] re·fund'a·ble adj., re·fund'er n., re·fund'ment n.
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.