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 pe