Series 50: Variable-Rate Demand Obligations (VRDOs)

Variable-Rate Demand Obligations (VRDOs)

In the 1980s Congress began imposing limits on certain types of bond issues. The Tax Reform Act of 1986, for example, placed a limit on the amount of tax-exempt commercial paper that could be issued by municipalities. Issuers that rolled over their commercial paper were deemed to have issued new debt. Once their debt limits were reached, any new issue would come without tax-exempt status. This would effectively eliminate any additional use of that source of funds. This new restriction led to the crea