A company may be able to pay its coupons today and still struggle when a large bond matures. Refinancing risk is the danger that it cannot replace maturing debt on acceptable terms, forcing it to use scarce cash, sell assets, issue costly new debt or restructure. It is one of the easiest corporate-bond risks to overlook when investors focus only on current income. Why solvent-looking companies refinance Companies often borrow for many years to fund assets, acquisitions or ordinary operations. A bond typically has a repayment date, and management may plan to refinance instead of accumulating every dollar of principal in cash. This is normal financial management where access to capital markets is reliable. It becomes dangerous when investors are unwilling to lend or insist on much higher interest rates. Imagine a company with a $300 million bond maturing in 18 months. It earns enough cash to pay $15 million in annual interest, but has only $40 million in unrestricted cash. The compa...