What does a successful refunding typically aim to achieve?

A successful refunding typically aims to achieve a reduction in interest expense over time. When a municipality chooses to refund its existing bonds, it usually does so to take advantage of lower interest rates available in the market compared to the rates on the older bonds. By issuing new bonds at these lower rates and using the proceeds to pay off the existing debt, the municipality can decrease its overall interest costs. This strategy helps improve financial flexibility, allowing the municipality to allocate funds more effectively and potentially reducing the burden on taxpayers over time.

The other choices do not align with the primary goal of refunding. Higher interest rates for new bonds would increase financial burdens rather than decrease them. Immediate elimination of all debt is not a typical goal of refunding, as it usually involves restructuring rather than complete debt elimination. Issuing bonds with longer maturities might not necessarily lead to lower interest expenses over time; it may even result in higher overall costs if those rates are not beneficial. Thus, the primary aim of a successful refunding is indeed to achieve a reduction in interest expense, enhancing the financial situation of the municipality over the long term.