What is the defining characteristic of a current refunding?

The defining characteristic of a current refunding is that bonds are issued and redeemed within 90 days. This allows an issuer to take advantage of favorable market conditions to lower interest costs by refinancing existing debt with new bonds. The short time frame ensures that the old bonds are called and replaced without any significant delay.

Current refundings are typically executed to achieve immediate savings on interest payments, and the new bonds can come with a lower interest rate, reflecting current market rates. This method provides a straightforward approach to managing debt while maximizing cost-effectiveness for the issuer.

Other aspects such as needing an escrow account or multiple refunding within a year do not distinctly define current refunding, as those conditions may apply to different types of refinancing strategies. For instance, an escrow account is generally associated with advanced refundings, which involve a longer timeline. Therefore, the emphasis on the 90-day window is what sets current refundings apart as a specific debt management practice.