WASHINGTON — The Treasury Department resumed sales of state and local government series securities on Tuesday at noon, Eastern Standard Time.
The reopening of the SLGS window follows President Obama signing legislation on Saturday that suspends the debt limit through March 15, 2015. Congress passed the measure last week.
SLGS are purchased by municipal bond issuers that are subject to arbitrage rebate or yield restriction requirements of the tax code and want to avoid violating them. Issuers often purchase SLGS for advance refunding escrows to ensure their investment yield will not significantly exceed the yield of their refunding bonds and that they will not violate yield restriction requirements. SLGS can be specially tailored so that their maturities match the maturities of the municipal securities being refunded.
The SLGS window had closed on Feb. 7 to help Treasury manage the national debt until the debt limit was raised or suspended. SLGS count against the debt limit, so suspending sales stops further increases that would be counted against the limit if they continued to be issued.
