Temporary Period

The period of time (often set forth in the Tax Certificate), during which a particular category of proceeds may be invested in higher yielding investments without the Issue being treated as Arbitrage Bonds under Section 148 of the Code.

The availability of Temporary Periods is based on the reasonable expectations of the Issuer on the date of issuance of the Bonds as documented in the Arbitrage Certificate. Generally, sale proceeds and investment proceeds of new money Bonds for capital projects can be invested at an unrestricted Yield for a three-year Temporary Period if the time test, the due diligence test, and the expenditure test are met.

There are other Temporary Period rules and exceptions, which depend on the intended use of the proceeds being invested. These rules are complex, and should be discussed with your supervising attorney and, if applicable, Special Tax Counsel.

See Also


Profit from differences in markets. All tax-advantaged bonds are subject in one way or another to the arbitrage requirements, which are contained in Section 148 of the Code and the Treasury Regulations that go along with it.


As computed under the Code provisions applicable to bonds, the internal rate of return that causes the present value of the payments of principal and interest (and, in certain cases, certain other payments) on an issue of bonds to equal the issue price of the bonds.

Hudson Yards Rail Yards

Start with the Bond Basics

Governmental (Purpose) Bonds

Bonds issued by an issuer to finance all or a portion of its own project and that do not satisfy both the Private Business Tests and the Private Loan Financing Test.