Bond help--finance?

i need some clarification please...

if a company had long term debt issued at 14%, and its closing cost was $104...and could purchase new long term debt at a lower rate, say 12%...would they issue new LT debt to pay off early the debt at 14%? or would they wait until the closing cost was under $100?

im not sure i understand--because i would issue new debt at a lower rate to rid the old debt...but i think i would actually be paying more than i issued it for because id be paying an extra $4? please help...thank you in advance

It depends on whether the debt is "callable" which means that the company has a chance to pay off before maturity. If the bonds are not callable, the company would have to purchase them on the bond markets. If they have to pay 104 per 100 and are borrowing at 12%, it would take them about 2 years to come out ahead.

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