Guaranteed Investment Contract (GIC)

An investment agreement offered by financial institutions (e.g., banks or insurance companies) which pays a stated rate of return on invested Bond proceeds for a stated term. In order to establish the fair market value of a Guaranteed Investment Contract for purposes of meeting the requirements under the Code and Treasury Regulations for Tax-Exempt Bonds, bids must be sought for Guaranteed Investment Contracts.

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A third party’s promise to pay the debt service on the bonds or perform some other obligation, which is the primary obligation of another party.