Series 50: Temporary Periods

Temporary Periods

Right after a bond is issued, under certain conditions, the IRS allows municipal issuers to invest bond proceeds in higher yielding investments for a “reasonable temporary period,” until the proceeds are needed. For example, if a municipality issues bonds to pay for the construction of several new schools, the municipality is allowed to temporarily invest the proceeds at a higher rate until they are needed for the project. There are several temporary period exceptions, but we will focus on two of the simpler temporary period restrictions.

If the proceeds of the bond are to be sp