Advance Refunding.

Advance Refunding:

A method of eliminating a bond as an obligation of the issuer. This is accomplished by issuing a new bond issue and using the proceeds to purchase government obligations which will be escrowed and used to provide debt service until maturity of the original issue ( escrowed to maturity) or until the first call date ( prerefunded to the call). Also see Defeased Bonds.

Bond:

An IOU or promissory note of a corporation, municipality, or the US government, usually issued in multiples of $1,000 or $5,000, with maturities of more than 10 years.

Issue:

Any of the company’s securities or the act of distributing such securities.

Issuer:

The organization issuing or proposing to issue a security.

Debt Service:

The yearly amount of debt service and principal payable on a bond issue.

Escrow:

Money or securities held by a third party until conditions of a contract are met.

Maturity:

The date on which a loan or a bond comes due and is to be paid off.