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Funding
Source:
Encyclopedia of Banking & Finance (9h Edition) by Charles J Woelfel
(We recommend this as work of authority and you can order
it here)
The process
of converting the floating indebtedness of a government or political subdivision
thereof, or a business corporation, into long-term debt.
Funding may be accomplished by converting a series of short-term
note issues into long-term bonds when interest rates are low or, in corporate
finance, by selling stock and paying off short-term debts with the proceeds.
In this way stockholders virtually buy out the interest of the
creditors. Funding by means
of the sale of additional stock is usually undertaken when the equity
market is favorable.
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