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Debt Restructuring
What does it mean?
A method used by companies with outstanding debt obligations to alter the terms of the debt agreements in order to achieve some advantage.
In Other Words...
Companies use debt restructuring to avoid default on the existing debt or to take advantage of an interest-rate decrease.
A company will often issue callable bonds so that they have the ability to restructure their debt readily in the future. The existing debt is called and then replaced with new debt at a lower interest rate.
Companies can also restructure their debt by altering the terms and provisions of the existing debt issue.
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Related Terms
Callable Bond | Debt | Extraordinary Redemption | Forced Conversion | Make Whole Call | Refinance
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