SECTION 4. Temporary Rule Allowing

Governmental Issuers to Purchase Their Own Auction Rate Bonds

Solely for purposes of § 103 and §§ 141 through 150, a governmental issuer may purchase its own tax-exempt auction rate bond on a temporary basis without resulting in a reissuance or retirement of the purchased tax-exempt bond if it meets the following requirements: (1) the governmental issuer holds the bond for not more than a 180-day period from and after the date of purchase; and (2) the governmental issuer purchases the bond before October 1, 2008. Similar to the treatment of a bond purchased pursuant to a qualified tender right under the operating rule in § 3.2(3)(b) of this notice, an auction rate bond purchased by a governmental issuer pursuant to this § 4 is treated as not retired pursuant to and as a result of this special rule until not later than the end of this 180-day period, and, subsequent to the end of this 180-day period, a governmental issuer generally may not hold its own bond without causing a retirement of such bond under the general rules in § 3.1 of this notice.

Thus, recognizing that the bond is treated as not retired during this 180-day period, the governmental issuer may re

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market conditions is treated as not being so “related” for this purpose.

5.3. Treatment of Certain Premiums as Proceeds for Arbitrage Purposes. Solely for purposes of the arbitrage investment restrictions under § 148, any premium received by an issuer pursuant to a conversion of the interest rate on a qualified tender bond to a fixed interest rate for the remaining term of the bond to maturity in a qualified interest rate mode change under § 3.2(2) of this notice is treated as additional sale proceeds (as defined in § 1.148–1(b)) of such bonds.