QUICK DEFINITION
Refinancing Risk is the risk that maturing debt must be replaced at materially worse rates or under difficult market conditions.
WHY IT MATTERS
Why Refinancing Risk matters in bond markets
Refinancing risk rises when large amounts of low-coupon debt mature into a higher-rate environment.
MARKET CONTEXT
How to think about it
Bond investors use refinancing risk as part of a wider framework that links prices, yields, cash flows, liquidity and risk. The concept should therefore be read together with its related terms rather than as an isolated definition.
Is Refinancing Risk important for fixed-income investors?
← Back to the Bond Market Glossary Yes. Refinancing risk rises when large amounts of low-coupon debt mature into a higher-rate environment.