Public Finance Alert
For a variety of reasons related to arbitrage, it often is important to identify the "issue price" of tax-exempt bonds with precision and certainty. Existing Treasury Regulations generally allow the "issue price" of publicly offered bonds to be determined based on the first price at which at least 10% of all substantially identical publicly offered bonds in fact are sold to purchasers other than underwriters and wholesalers. By a special alternative rule, existing Treasury Regulations allow the "issue price" to be determined based on the issuer's reasonable expectations as of the sale date about the price at which substantially identical publicly offered bonds will be sold to the public.
On December 9, 2016, the Internal Revenue Service published final Treasury Regulations (the "New Regulations"), which revise the definition of "issue price" for arbitrage purposes. The New Regulations apply to bonds sold on or after June 7, 2017, and provide the following rules in connection with tax-exempt bonds issued for money:
No later than the issue date, the issuer must identify on its books and records maintained for the bonds which of the above rules for determining "issue price" it has selected for the bonds.
 Examples include yield restricted investment of bond proceeds, where yield is a function of the "issue price."
 See Reg. 1.148-1(b).