Tennessee Code Title 9. Public Finances § 9-21-914

(1) Immediate payment and retirement of the obligations being refunded; or

(2) Extent not required for the immediate payment of the outstanding obligations being refunded, the proceeds of the general obligation refunding bonds shall be deposited in escrow with a bank or trust company either located in this state or regulated by a federal entity to provide for the payment of the outstanding obligations and to pay any expenses incurred in connection with the refunding, and may also be used to pay interest on the general obligation refunding bonds prior to the retirement of the outstanding obligations.

(1) Direct obligations of, or obligations, the principal of and interest on which are guaranteed by, the United States;

(2) Obligations of any agency or instrumentality of the United States;

(3) Certificates of deposit issued by a bank or trust company located in this state; provided, that such certificates shall be secured by a pledge of any of the obligations referred to in subdivisions (b)(1) and (2) having an aggregate market value, exclusive of accrued interest, equal at least to the principal amount of the certificates of deposit so secured; or

(4) Obligations which are rated in either of the top two (2) highest rated categories by a nationally recognized rating agency of such obligations and whose interest income is exempt from tax by the United States, which are direct general obligations of the state or a political subdivision thereof or obligations guaranteed by the state, to the payment of the principal of and interest on which the full faith and credit of the state are pledged or obligations of any other state or political subdivision or instrumentality thereof; provided, that approval of the comptroller of the treasury or the comptroller's designee is first obtained.