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SLGS Window Closes

As the federal government continues to move closer to its debt ceiling x-date, all options are on the table.

US Treasury Building in Washington DC

Treasury Secretary Yellen sent a letter on the status of the U.S.’s borrowing limit to Speaker of the House Kevin McCarthy, yesterday, indicating that “[a]fter reviewing recent federal tax receipts” the U.S. Treasury Department now estimates the federal government could exhaust its ability to satisfy obligations as early as June 1, 2023. She emphasized the importance of not waiting until the “last minute” to address the impending situation.

The letter announced that Treasury will also suspend the issuance of State and Local Government Series (SLGS) securities until the situation is resolved. Historically, Treasury has included the suspension of SLGS when deploying extraordinary measures designed to stretch the federal government’s ability to operate past its debt ceiling. When Yellen initially announced this round of extraordinary measures in January, she notably did not include the suspension of SLGS, but indicated that the option remained on the table.

State and local governments regularly use SLGS as a tool to manage their finances, particularly to stay in compliance with arbitrage rules and in managing refunding escrows.

NABL will continue to monitor the status of the U.S. debt ceiling and will inform members as information becomes available.