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Funding risk |
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Funding riskRelated: Interest rate riskFunding risk Similar MatchesRefundingRefundingRedeeming a bond with proceeds received from issuing lower-cost debt obligations with ranking equal to or superior to the debt to be redeemed. Senior refundingSenior refunding../../finance-glossary/ment by the issuer of securities with 5-to 12-year maturities with securities of 15-year or longer maturities, in order to delay, reduce, or consolidate payment. Minimum funding requirementMinimum funding requirementA rule introduced in the wake of the Maxwell pensions scandal which was intended to ensure that company pensions funds always had enough assets to pay out their liabilities (i.e. pensions to retired members of the scheme).The legislation uses the yield from long term gilts as the yardstick by which a pensions fund's liabilities are measured. To stay within the rules, funds have felt obliged to buy these long-term bonds, with the result that their price has gone sky high.One alternative being considered is to change the whole way liabilities are valued and, in effect, to allow the funds to invest in more exciting securities than gilts, but to couple this with an insurance fund that bails out those funds that are unable to meet their liabilities. This insurance fund would be called the Central Discontinuance Fund (CDF). FundingFundingUsed to describe the refinancing of a debt prior to its maturity (the same as refunding). In corporate finance refers to the floating of bonds to raise finance and levels of capital. See also: refunding. Low coupon bond refundingLow coupon bond refundingRefunding of a low-coupon bond with a new, higher-coupon bond. Further SuggestionsStopping curve refunding rateHigh coupon bond refunding Net advantage of refunding Advance refunding Resolution Funding Corporation (RefCorp) Prerefunding Evergreen funding Junior refunding Private Export Funding Corporation (PEFCO) Equity funding |
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