medium · Debt Capital Markets bond-instruments-structures
What happens to the OID on a bond if the issuer decides to refinance the debt before its scheduled maturity?
- The remaining unamortized OID is typically accelerated and expensed immediately.
- The OID keeps amortizing on the original schedule despite the early retirement.
- Bondholders are required to refund the unamortized OID portion to the issuer.
- The unamortized OID is reclassified as additional equity credit on the balance sheet.
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