Under a bond refunding, the proceeds of a new bond issuance are either deposited in escrow to pay the debt service on the outstanding bonds when due or used to promptly retire previously issued bonds.

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This is a correct definition of a bond refunding. The proceeds of the new bond issuance are used to either retire the previously issued bonds or placed in escrow to pay the debt service on the outstanding bonds when due.

Under a Bond Refunding, the Proceeds of a New Bond