The bond issue is sponsored by a government entity but the proceeds are directed to a private, for-profit business.
The bond issue is created and organized by a sponsoring government, with the proceeds used by the private business.
The sponsoring government holds title to the underlying collateral until the bonds are paid in full.
IRBs are desired as the private business receives a lower interest rate (due to the bonds tax-exempt status), a property tax exemption, and a long-term, fixed rate financing package.
[2] In the United States IRBs are governed by IRS statute and include the following provisions:[3]