How are the warrant proceeds invested?
The warrant proceeds are invested in a guaranteed investment contract or “GIC”. The ISCAP documents require that this investment be approved by the bond insurer and be made with a highly creditworthy financial institution that has a debt rating in the AAA or AA category. The GIC provides a guaranteed fixed interest rate for the warrant proceeds throughout the term of the warrants. The interest rate is typically very attractive compared to other short term investment alternatives. In addition, the GIC allows participating school districts complete flexibility to make cash advances and to redeposit funds without penalty as necessary to meet their cash flow needs.
