WASHINGTON — The Treasury Department resumed sales of state and local government series securities Tuesday night after President Obama signed legislation to increase the federal debt limit beyond $14.3 trillion.
The Treasury announced the reopening of the SLGS window Tuesday night.
State and local municipal issuers buy SLGS for their advance-refunding escrows because the securities have lower yields than Treasuries purchased in the market and the maturities can be specially tailored to match the those of the bonds being refunded. SLGS help muni issuers avoid violations of arbitrage restrictions, which would occur if their investment yield exceeds their bond yield.
The Treasury had suspended SLG sales on May 6 to avoid reaching the limit. Administration officials had said that the federal debt limit would have to be increased by the end of the day on Aug. 2 to avoid a default.
The SLGS program was established in 1972 and has been through several modifications since then. This was the seventh time the Treasury had closed the SLGS window.
