What does "level savings" refer to in the context of refunding bonds?

Level savings, in the context of refunding bonds, refers to the concept of achieving savings that are realized in approximately equal annual amounts over the entire life of the refunding bonds. This approach is often utilized to provide a predictable and consistent stream of savings for issuers, which can be easier to plan for in terms of budgets and financial forecasting.

By structuring the savings in this way, issuers can effectively manage their debt service obligations, ensuring that they do not experience significant spikes or drops in their cash flow related to the bond payments. This level savings strategy is particularly advantageous as it enhances fiscal stability and allows for more effective long-term financial planning.

Thus, option B accurately captures the essence of “level savings,” emphasizing the consistent, manageable nature of the savings across the life of the bonds.