§ 26286 Bond Refunding Exchange Rules

• •The government can swap old bonds for new ones instead of selling new bonds to pay off the old ones.
• •The new bonds must be worth at least the same as the old ones, plus any interest that has built up.
• •This is like trading an old toy for a new one, but the new one has to be just as good or better.

Imagine you have an old $100 bond that the government owes you, and they also owe you $5 in interest.

The government can give you a new $105 bond instead of paying you the $105 in cash. This way, they don’t have to sell new bonds to get the money to pay you back.