Public & Infrastructure Finance Alert

    August 2011

    The US Department of the Treasury has announced the immediate resumption of the sale of State and Local Government Series (SLGS) Treasury securities. This announcement followed the enactment of legislation on August 2 increasing the debt limit and allowing the Bureau of the Public Debt to accept subscriptions for new issues of SLGS securities. The Treasury had suspended sales of SLGS on May 6, 2011 to assist Treasury management of debt subject to this limit.

    The resumption of SLGS issuance will facilitate tax-exempt bond transactions, such as advance refundings, for which yield-restricted investments of bond proceeds are required. In the absence of SLGS, issuers have generally been required to follow a bidding procedure for the purchase of open market Treasury securities, increasing transaction costs and complexity. The renewed availability of SLGS will generally improve the economics of advance refundings and increase the likelihood that the resulting debt service savings will warrant the refunding.

    Lawyers in the Squire Sanders Public & Infrastructure Finance Practice Group are available to answer any questions about, or further discuss the implications of, the sale of SLGS securities.