If the debtor assigns itsobligations, thenew debtor shallassumethe collateraldebtsrelating to the principaldebts, except those debts exclusively belong to the originaldebtor.
The bonds initially were issued at a price that represented about 60% of the fair market value of the airliners being leased, meaning an investor buying the bonds at 70 cents on the dollar is getting the underlying collateral for about 40% of its original market value.
Once a municipal bond is refinanced, (prerefunded) the issuer uses the proceeds of the new issue and purchases US Treasury securities (collateral) that are used to pay the interest and principal on the original, more expensive debt until maturity or the call date, whichever the escrow agreement states.