Refinancing
Short definition
Refinancing replaces existing debt with new debt or equity. The aim is to extend tenor, change cost, reset covenants or clear a bullet — not automatically “cheaper debt”.
Detailed explanation
The new pack takes out the old balance or adds limit. Cost: the new rate, fees, prepayment premia, broken hedges. In a high-rate regime refinancing can cost more; sometimes the purchase is tenor and headroom, not rate.
A committed take-out is not a market assumption. The latter is refinancing risk.
Why it matters for the CFO
A maturity wall closes only with a commitment or with cash. “The market will be open” is not a stress plan.
How to read it
If all-in new cost < old cost + breakage, the refinancing may be economic; otherwise you are buying tenor. A covenant reset is a separate value item.
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What to learn next
Definitions are educational. They are not investment, credit or tax advice.