A bond that is issued in order to pay off (redeem) an existing bond issue before maturity. At the outset, crossover bonds are secured by the escrow of investments made using the crossover bond proceeds while the bonds to be refunded remain secured by the original revenue cash flows. That is, proceeds from a crossover refunding bond are placed in escrow until the date when the previous bond issue is actually redeemed. On a specified date, the refunded bonds will be paid off from the funds held in escrow and the crossover bonds become payable from the original revenue stream.
Finance
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