Investing Bond Proceeds in Indiana: Permitted Investments and Rules

Indiana Code 5-13-9 is the chapter under which Indiana local officers invest public funds, and the Treasurer of State's 2025 permissible-investments summary lists what the chapter allows: deposit accounts and certificates of deposit, U.S. Treasury and agency securities, certain Indiana municipal securities, money market funds, repurchase agreements and the state's investment pool.

Indiana is one jurisdiction among many, and the permitted investments by state overview maps how other states route the same question.

What statute governs Indiana public-fund investments?

Indiana Code 5-13-9 governs how Indiana local public officers invest public funds, according to the Treasurer of State's 2025 summary of the chapter's permissible investments.

That summary is one layer only, because the MSRB glossary defines permitted investments as "the instruments in which bond proceeds or other funds may be invested pursuant to the provisions of the bond contract," so the issue's own documents are a second source of the list.

Where an issue uses an indenture, the MSRB describes it as a contract between the issuer and a trustee for the bondholders' benefit that sets out the parties' rights, duties and remedies, and it notes that many governmental issues, especially general obligation bonds, may not use one; the bond indenture guide explains the document.

The Treasurer of State materials summarize the public-funds chapter, and the sources behind this page carry no reading of Indiana's bond statutes or of a particular issue's bond contract.

Reading those sources together for a given issue is work for bond counsel.

How a bond-contract list and a statutory list interact is the subject of the permitted investments guide.

What investments does IC 5-13-9 permit?

The Treasurer of State's 2025 summary presents IC 5-13-9 as allowing deposit accounts and certificates of deposit, U.S. Treasury and agency securities, certain Indiana municipal securities, money market funds, repurchase agreements, the state investment pool and an investment cash management system.

For the Indiana municipal securities entry, the guidance quotes the condition in full: "Municipal securities issued by an Indiana entity that has not defaulted in the preceding 20 years from the date of purchase with a final stated maturity of not more than 10 years."

The guidance also states a general limit: securities may have a maximum maturity of two years unless a properly adopted investment policy under IC 5-13-9-5.7 authorizes maturities up to five years.

The sources behind this page do not say how the 10-year term for Indiana municipal securities relates to that two-year limit, so reading the two together is work for bond counsel.

A policy that extends maturities must be written, adopted at a public meeting, cap investments with maturities over two years at 25% of the total portfolio, and state an expiration date no more than four years out.

What rules apply to investment agreements, GICs and repurchase agreements in Indiana?

The Treasurer of State's summary of IC 5-13-9 names repurchase agreements among the permissible investments and names neither investment agreements nor guaranteed investment contracts.

That silence settles nothing on its own about either instrument, and this page takes no position on whether Indiana law allows or bars an investment agreement or a guaranteed investment contract for bond proceeds.

The reading comes from Indiana's bond statutes and the issue's own bond documents, neither of which is a source this page carries, so whether a given issue's proceeds can sit in a guaranteed investment contract or an investment agreement is a question for bond counsel.

On repurchase agreements, the guidance describes IC 5-13-9-3 as requiring the counterparty to be a depository on the state's approved list, a final stated maturity of one day, and full collateralization with the value determined daily, with the agreement available as a one-time or ongoing commitment at a rate renewed each day.

This rule comes from the Treasurer's summary, so the text of IC 5-13-9-3 controls before anyone relies on the rule as statutory language.

An overnight final stated maturity is a tight term compared with the negotiated withdrawal flexibility described in the full-flex repurchase agreement guide, and which structures an issue can use follows the permitted-investments list its own documents and statutes supply.

What rating and collateral requirements apply?

The rating and collateral conditions in the Treasurer of State guidance attach to money market funds and repurchase agreements, with separate licensing and capital conditions for the firms and banks involved.

Under IC 5-13-9-2.5 as the guidance summarizes it, a money market fund must be rated AAA/Aaa, hold only U.S. government, agency or GSE securities or repurchase agreements on them, and be bought through an approved depository.

A repurchase agreement must be fully collateralized, with the value determined daily, and its counterparty must be a depository on the state's approved list.

For securities transactions, the guidance directs officers to use an SEC-licensed broker-dealer and a custodial bank that is an approved depository or has $10 million or more in capital and surplus.

The repo collateral guide describes how collateral and margin mechanics work in bond-proceeds repurchase agreements generally.

Does Indiana have a state investment pool?

Indiana's local government investment pool is run by the Treasurer of State under IC 5-13-9-11, according to the Treasurer's own summary.

The MSRB glossary defines a local government investment pool as a pool set up by a state or local governmental entity to invest the public funds of participating governmental units, with participants buying shares or units, often in a trust; the local government investment pool guide explains how pools work.

This page states no current yield, rating or balance for the pool, and any current figure would need to come from the Treasurer of State's own materials.

Choosing between the pool and a bid investment is the comparison the state pool or bid a GIC guide takes up.

What procurement rules apply to Indiana public-fund investments?

The Treasurer of State guidance attaches two state-level procurement rules, three quotes for certificates of deposit and competitive award for investment cash management systems, while the federal arbitrage rules set their own conditions for soliciting agreements.

For certificates of deposit, IC 5-13-9-4(b) requires the investing officer to obtain three quotes on the specific rate of interest for the term of the certificate of deposit and to record them in a memorandum.

A contract for an investment cash management system under IC 5-13-11 must be awarded under the IC 5-22 bidding provisions and may not exceed two years.

For an investment agreement or repurchase agreement solicited under the arbitrage rules, Treasury Regulation 1.148-5(d)(6)(iii)(A) makes the solicitation bona fide only if written bid specifications are timely sent to potential providers and include all material terms and only commercially reasonable terms, with electronic form permitted.

The regulation defines a material term as one that may directly or indirectly affect the yield or the cost of the investment.

What those specifications contain is the subject of the bid specifications guide, and the fair market value safe harbor guide collects the full set of federal conditions.

Fee terms can matter in a more specific way for conduit issuers, because IRS Publication 5005 notes that conduit issuer fees can raise the effective yield on a conduit loan, which is a purpose investment, and section 148 generally limits purpose-investment yield to the bond yield plus a permitted spread.

Where proceeds fund a refunding escrow instead, GFOA's refunding guidance describes an escrow bidding agent who solicits bids for open-market escrow securities and notes that a municipal advisor, if engaged, may be able to act in that role; the refunding escrow guide covers the structure.

What representative transactions does mGIC have in Indiana?

The representative transactions mGIC names publicly include no Indiana project by name; the list runs from the Grand River Dam Authority (OK) and Cardinal Stadium in Louisville to the DHL air cargo hub at CVG and Prairie State Energy Campus, and it appears on the transactions page.

Behind that list is a record of more than $60 billion in bond proceeds invested and swap notional executed across more than 1,000 transactions for issuers in more than 40 states.

mGIC is an independent, SEC-registered municipal advisor that sells no investment product and does not act as principal in the investments it evaluates, providing reinvestment advisory, Bidding Agent and documentation services across guaranteed investment contracts, full-flex repurchase agreements and structured Treasury portfolios.

Its fee is paid by the winning provider rather than the issuer, at or below the safe-harbor maximum in the Treasury arbitrage regulations, and it is disclosed.

For a no-obligation review of how an Indiana fund's investments line up with IC 5-13-9, the bond documents and the arbitrage rules, mGIC offers Indiana reinvestment help.

Final determinations about what Indiana law permits for a particular issue belong to the issuer's bond counsel and tax counsel.

Last updated 2026-10-06.

This page is general educational information about municipal finance and federal and state rules as of the date shown. It is not legal, tax or investment advice, and it is not a recommendation about any particular investment. Product availability, legality and suitability depend on the issuer, jurisdiction, governing documents and transaction-specific facts. Final legal and tax determinations remain with the issuer's bond counsel, tax counsel and other advisors.