Investing Bond Proceeds in Oklahoma: Permitted Investments and Rules

Oklahoma political subdivisions can invest bond proceeds in the instruments 62 O.S. 348 lists: obligations of the United States, its agencies and government-sponsored enterprises, bankers' acceptances and commercial paper within statutory caps, repurchase agreements collateralized by listed securities, SEC-regulated money market funds and qualified interlocal pools.

Since November 1, 2025, that statute is the operative law for Oklahoma political subdivisions, and it carries no bond-proceeds carve-out and no guaranteed-investment-contract language, so whether an investment agreement is available for a particular issue is a determination for bond counsel, reading the bond contract against the statute.

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

Which statute governs Oklahoma bond-proceeds investments?

Since November 1, 2025, Oklahoma political subdivisions have invested under 62 O.S. 348, which conditions investment authority on a written investment policy, ordinance or resolution.

The section was enacted by Laws 2025, SB 957, c. 110, § 1, effective November 1, 2025, and the OSCN index now lists the former 62 O.S. 348.1, 348.2 and 348.3 as repealed, so pre-2025 commentary that cites 348.1 or 348.3 describes law no longer in force.

The written policy must address liquidity, diversification, safety, yield, maturity and quality, with what the statute calls "primary emphasis on safety and liquidity."

Two scope limits matter for bond-financed funds: the section carries no bond-proceeds carve-out, and public trusts organized under Title 60 and the provisions of a particular bond indenture raise questions this summary of 348 does not answer.

What investments does 62 O.S. 348 permit?

62 O.S. 348(B) permits obligations of the United States, its agencies and government-sponsored enterprises without a stated maturity cap, prime bankers' acceptances and prime commercial paper within caps, repurchase agreements, SEC-regulated money market funds and qualified pooled programs.

The federal-obligation paragraph, 62 O.S. 348(B)(1), covers U.S. government, agency and GSE obligations, and the section states no maturity cap for them.

The caps land on prime bankers' acceptances and prime commercial paper: bankers' acceptances are limited to 270 days and 10 percent of surplus funds, and commercial paper to 180 days, 7.5 percent of surplus funds and 10 percent of an issuer's paper.

Those two caps do not apply to qualified pools, which the statute treats under its own pooled-program rules.

How the surplus-funds caps map onto a bond fund is one of the determinations bond counsel makes where the statute and the bond documents meet.

What are the rules for investment agreements, GICs and repurchase agreements?

62 O.S. 348 names repurchase agreements, money market funds and qualified pooled programs, and it contains no guaranteed-investment-contract or investment-agreement language, so whether an investment agreement is available for a particular issue is a determination for bond counsel, reading the bond contract against the statute.

For repos, 62 O.S. 348(B)(9) requires underlying collateral consisting of the items specified in paragraphs 1 through 8, and the section sets no repo term and no margin, while paragraph (10) admits money market funds only if the fund is SEC-regulated and limits its holdings to the items in paragraphs 1 through 9.

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," and that definition is where an investment-agreement question goes next.

Where the bond documents use an indenture, the MSRB glossary 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 the exact nature of the security for the bonds, and the MSRB notes that many governmental issues, especially general obligation bonds, may not use one.

Whether a guaranteed investment contract, a full-flex repurchase agreement or a structured Treasury portfolio can be used for a given Oklahoma issue is a legal determination for bond counsel, reading the bond documents against 62 O.S. 348.

The GIC, full-flex repurchase agreement and structured Treasury portfolio guides describe how each structure is built and bid.

Conduit issuers carry an added federal overlay: IRS Publication 5005 notes that fees charged by the conduit issuer 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 spread.

What rating and collateral requirements apply?

62 O.S. 348 states instrument caps and a prudent-person standard, and its quality screens include the word "prime" on bankers' acceptances and commercial paper.

Subsection (E) requires investments to be made with the judgment and care of persons of prudence, "not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived."

On collateral, the section requires repo underlying collateral to consist of the items specified in paragraphs 1 through 8, and it sets no margin percentage and no repo term.

When an investment for bond proceeds is competitively bid, its credit and collateral terms are material terms under the federal bidding rules, since a term is material if it may directly or indirectly affect the yield or the cost of the investment, which the procurement rules below pick up.

Is there a state pool option in Oklahoma?

Yes: 62 O.S. 348(B)(11) permits qualified pooled programs governed by an interlocal agreement under 74 O.S. 1001-1008, and subsection (C) deems participation in a local government investment pool to authorize the investments in items 1 through 10.

The MSRB glossary describes a local government investment pool as an investment pool established by a state or local governmental entity or instrumentality that serves as a vehicle for investing the public funds of participating governmental units, with participants buying shares or units, often in a trust.

The sections quoted here describe the qualified-pool pathway without naming a fund.

The local government investment pool guide explains how pools are structured, and the state pool or GIC comparison covers the trade-off issuers weigh between keeping funds in a pool and bidding an investment.

What are the procurement and bidding rules?

Oklahoma puts competitive bidding in the written investment policy, and the federal fair-market-value rules then set what a bond-proceeds bid solicitation must contain.

The statute's procurement line reads: "A written investment policy shall, to the extent practicable, provide for the use of competitive bids when purchasing brokered securities."

For a GIC or repo bought with bond proceeds, a solicitation is bona fide under Treasury Regulation §1.148-5(d)(6)(iii)(A) only if the written bid specifications are sent timely to potential providers and contain all material terms and only commercially reasonable terms, with electronic form permitted.

The regulation's materiality test is broad: "A term is material if it may directly or indirectly affect the yield or the cost of the investment."

For yield-restricted defeasance escrows, the same rule adds that the hold-firm period must be no longer than reasonably required.

Refunding escrows funded with open-market securities add a bidding role of their own: GFOA describes an escrow bidding agent that solicits bids for the securities used in the escrow.

Around that bidding, GFOA describes an escrow agent, typically a commercial bank, that holds the escrow investments, and a verification agent, typically a CPA firm, that confirms the escrow is sufficient and, where yield is limited, that the escrow yield does not exceed the permitted yield.

GFOA adds that a municipal advisor, if engaged, may be able to act as the escrow bidding agent.

mGIC acts as Bidding Agent for these solicitations: it prepares the bid specifications, solicits qualified providers, manages questions during the solicitation and receives and compares bids on rate and non-rate terms.

After award, it coordinates documentation and settlement with the provider's counsel and the financing team and delivers the Bidding Agent and provider certifications to bond counsel, finishing with a compliance file.

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.

Which representative transactions are in Oklahoma?

The transactions page lists representative transactions by name, and its Oklahoma names include the Grand River Dam Authority.

They appear by name only, without published deal sizes, structures, providers, rates, bid counts or results.

Behind the 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, with reinvestment work as the focus since 2002.

mGIC is an independent, SEC-registered municipal advisor that sells no proprietary investment product and acts as no principal in the reinvestment alternatives it evaluates.

For a free, no-obligation review of how a fund's holdings, draw schedule and bidding documents line up with 62 O.S. 348 and the bond documents, mGIC offers Oklahoma reinvestment help.

Final determinations about what 62 O.S. 348 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.