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SLGS FAQ

General SLGS Information

What are SLGS?

The State and Local Government Series (SLGS) securities program was initiated in 1972, as the result of federal legislation enacted in 1969, which restricted state and local government entities from earning arbitrage profits from investing bond proceeds in higher yielding investments. Under the SLGS program, the U.S. Treasury offers special low-yield securities to state and local governments and other issuers of tax-exempt bonds for investment of proceeds subject to IRS arbitrage restrictions.

What is the difference between Time Deposit and Demand Deposit SLGS?

Time Deposit SLGS are issued for terms fixed by the investor. They can be Certificates of Indebtedness (C of I's), with terms from 15 days to one year; Notes, with terms from more than one year to ten years; and Bonds, with terms from more than ten years to forty years. Time Deposit SLGS securities can be interest bearing with interest paying semi-annually on Notes and Bonds. Zero interest Time Deposit SLGS securities are offered also. Time Deposit SLGS securities are issued in whole dollar amounts with a minimum amount of $1,000. [344.4, 344.5 344.6]

Demand Deposit SLGS securities are one-day Certificates of Indebtedness that are automatically rolled over with interest each day until redemption is requested. Demand Deposit SLGS are also issued with a minimum of $1,000, but are not required to be whole dollar amounts. [344.7, 344.8, 344.9]

Where do I mail the SLGSafe Application forms?

Bureau of the Public Debt
Special Investments Branch
P.O. Box 396
Parkersburg, WV 26106-0396

For Overnight Service:
Bureau of the Public Debt
Special Investments Branch, HB113
Public Debt Warehouse & Operations Center Dock 1
257 Bosley Industrial Park Drive
Parkersburg, WV 26101

SLGS Daily Rate Table

How do I read the SLGS Daily Rate Table?

You can get help by visiting "How to Read the SLGS Daily Rate Table."

Buying SLGS

Who buys SLGS?

SLGS securities are purchased only by issuers with proceeds subject to yield restrictions and arbitrage rebate requirements under the Internal Revenue Code. Issuer refers to the Government body or other entity that issues state or local government bonds described in section 103 of the Internal Revenue code.

Where are SLGS purchased?

SLGS securities are purchased through the Special Investments Branch, Office of Public Debt Accounting, Bureau of the Public Debt, 200 Third Street, P.O. Box 396, Parkersburg, WV 26106-0396. Requests for purchase must be submitted through the secure Internet application, SLGSafe®. You must use SLGSafe to submit or change your subscriptions; view or change cases; and view reports, such as a payment or security reports. SLGSafe uses a secure Internet connection, so you must apply for access in advance. Click on the SLGSafe link above to learn more.

What is the SLGS daily rate table?

The SLGS securities daily rate table lists the applicable maximum rates allowed. The rates specified in the table are one basis point below the current estimated U.S. Treasury borrowing rate for a security of comparable maturity. [344.1(5)]

When do I subscribe for SLGS?

If the subscription is for $10 million or less, you must submit your intention to buy through SLGSafe at least five calendar days before the issue date. If the subscription is greater than $10 million, you must submit your intention to buy through SLGSafe at least seven calendar days before the issue date. [344.5(a), 344.8(a)]

Why do I have to subscribe so far in advance?

The U.S. Treasury requires advance notice of issues and redemptions to better forecast for the cash needs of the U. S. government.

As bond counsel (or financial advisor, underwriter, etc.) for the issuer, what TIN do I provide for the subscription - the TIN for the issuer or the conduit borrower?

When entering a subscription, you provide the tax identification number (TIN) of the "issuer" - the Government body or other entity that issues state or local government bonds described in section 103 of the Internal Revenue Code [344.1]. The SLGS securities will be issued to, and owned by, the issuer.

What if the conduit borrower, instead of the issuer, fails to pay for the SLGS securities?

If the conduit borrower fails to settle a subscription, the Bureau of Public Debt will ask the subscriber or the issuer to provide more information, including the conduit borrower's TIN. [344.2(m)(5)] If you provide the TIN for the conduit borrower, and the conduit borrower is the party failing to settle a subscription, the six-month penalty will be imposed on the conduit borrower rather than the issuer. [344.2(h)(l)]

I subscribed for Time Deposit SLGS securities before 8/15/2005. Why does SLGSafe require a yield certification when I redeem the securities early after 8/15/2005?

If your SLGS securities were purchased before 8/15/2005, yield certification does not apply. But, if the early redemption proceeds from those securities are used to purchase new SLGS securities then the yield certification applies to the new SLGS securities purchased. [344.2((e)(2)(i)(B))]

What types of instruments are included in "marketable security" for purposes of the yield certifications or prohibited practices, etc.?

A marketable security is any security other than a State or Local Government Series (SLGS) security. Examples of marketable securities include U.S. Treasury securities (other than SLGS securities), guaranteed investment contracts, and federal agency securities.

May state and local government entities use tax-credit bond or Build America Bond issuance proceeds to purchase SLGS securities?

Yes. Proceeds of bonds issued under Internal Revenue code (IRC) sections:

  • 54 (Clean Renewable Energy Bonds),
  • 54A (New Clean Renewable Energy Bonds, Qualified Energy Conservation Bonds, Qualified Zone Academy Bonds (issued after October 3, 2008), and Qualified School Construction Bonds),
  • 54AA (Build America Bonds),
  • 1397E (Qualified Zone Academy Bonds issued after December 20, 2006, and on or before October 3, 2008, with respect to an allocation arising after 2005),
  • 1400N(l) (Midwestern Disaster Area Tax Credit Bonds), and 1400U-2 (Recovery Zone Economic Development Bonds),

all of which are subject to the rules imposed by section 148, including yield restriction, may be used to purchase SLGS securities.

Proceeds of such bonds may be used to acquire SLGS for any situation in which the yield on the invested bond proceeds must be restricted, to include investments of proceeds in construction funds, reserve funds, and sinking funds under section 54A(d)(4)(C).

For more information on tax-credit bonds or Build America Bonds, contact the Internal Revenue Service's Office of Associate Chief Counsel (Financial Institutions & Products) at
(202) 622-3980.

Fedwire Procedures

How do I pay for my SLGS subscription?

Full payment for each subscription must be submitted by the Fedwire Funds Transfer System with credit directed to the U.S Treasury's General Account. The ABA number for Special Investments Branch (SIB) is 051036476. Full payment must be received by 4:00 p.m. Eastern time on the date of issue. [344.2(g)]

What are the procedures for Fedwire?

Instructions for Transmitting Payment for Subscriptions using Fedwire:

  • Use your bank's ABA routing number for the "Sender ABA".
  • Use your organization name for the "Sender Name".
  • ABA routing number 051036476 for the "Receiver ABA".
  • TREAS BPD SIB for the "Receiver Name".
  • BTR for the "Product-Code".
  • 1000 for the "Type Code".
  • The name of the State or Local Government entity must be placed in the "Originator's Name" field.
  • The name of the bank acting as trustee/escrow agent must be placed in the "Originator's" field.
  • The owner's taxpayer identification number must be placed in the "Reference to the Beneficiary" field.
  • The issue date must be placed in the "Originator to Beneficiary Information" field.

You may find that the ABA number for Special Investments Branch is not in the Banker's Book of ABA numbers. This is a special ABA number set up only for SLGS securities payments. If you get an error message when trying to send money through Fedwire, you may need to edit your file criteria for payments. If you fill out the information as shown above, we will receive the money.

Changing a Subscription Before Issue

What changes can I make to the subscription and how late can I make them?

Most changes to a subscription can be made up to 3:00 pm ET on the date of issue. You may change the Issue amount, Issuer name and address, Trustee Bank information, ACH instructions, and the Schedule of Securities, if those changes follow SLGS rules and regulations.

Early Redemptions

When can I early redeem a Time Deposit SLGS security?

If you subscribed on or after August 15, 2005, the Bureau of Public Debt must receive the early redemption request, through SLGSafe, no less than 14 days and no more than 60 days before the requested redemption date. [31 CFR 344.6(c)] If you subscribed for the security before August 15, 2005, you must request early redemption through SLGSafe no less than 10 days and not more than 60 days before the requested redemption date.

Which rate table is used to determine penalty/premium for an early redemption of SLGS securities?

Penalty/premium is determined using the subscription date rate table used to lock-in your SLGS rate. The possibility for a premium has been available since the SLGS regulations that were effective on or after October 28, 1996. The rate table in effect on the date of an early redemption request is used to determine the Treasury cost of borrowing rate.

I subscribed for Time Deposit SLGS securities prior to August 15, 2005. Do I have to comply with yield certifications?

If you early redeem SLGS securities subscribed for under SLGS regulations in place before August 15, 2005, yield certification requirements do not apply to such SLGS securities provided the proceeds are not invested in new SLGS securities. When the proceeds of SLGS securities redeemed prior to maturity on or after August 15, 2005, are reinvested in new SLGS securities, then the yield certifications apply. You will be required to make the certification at the time you subscribe for the new SLGS securities.

Debt Ceiling in the SLGS World

What is the debt ceiling and how does it affect SLGS?

Congress sets a limit (the debt ceiling) on the amount the Government is allowed to borrow. When the debt ceiling starts approaching, Treasury may suspend the issuance of additional debt to delay reaching the limit. SLGS securities sales are usually one of the first to be suspended. In past debt issuance suspension periods, new Time and Demand Deposit SLGS securities sales have been suspended. Consistent with Treasury's past practice, outstanding Demand Deposit securities will be rolled over into special ninety-day certificates of indebtedness. These certificates of indebtedness may be early redeemed according to the same lead time requirements that apply to Demand Deposit securities and will continue to earn simple interest at the Demand Deposit daily interest rate. Investors may choose to early redeem their SLGS securities before the SLGS window closes.

What did Treasury announce today regarding SLGS?

The Treasury Department announced today that on Friday, May 6, it will suspend until further notice the issuance of SLGS. Because the United States is very close to reaching the debt limit, Treasury must now take this action. This suspension will assist Treasury's management of the debt subject to limit.

Will the window close indefinitely? Do you know when you might open it again?

The Treasury Department will reopen the SLGS window when Congress enacts, and the President approves, legislation raising the statutory debt limit.

How long does it take to reopen the window once the debt ceiling is raised?

Depending on the time of day and the amount of notice given, it will take up to 3 hours to re-open the SLGS window.

When has Treasury suspended the sale of SLGS in the past?

Over the past 20 years, the SLGS window has been closed six times:

October 18, 1995 - March 28, 1996
May 15, 2002 - July 7, 2002
February 19, 2003 - May 26, 2003
October 14, 2004 - November 21, 2004
February 16, 2006 - March 16, 2006
September 27, 2007 - September 28, 2007
May 6, 2011 - August 2, 2011

Why are you closing the window on May 6th and not May 16th?

The Treasury Department cannot precisely forecast the amounts and issuance dates of SLGS securities that state and local government entities may request from the Department, so closing the SLGS window reduces the Department's uncertainty about its projections of growth in the debt that counts against the limit. Reducing uncertainty becomes critically important to the Department the closer the debt comes to the statutory limit. SLGS regulations require that SLGS subscriptions greater than $10 million be submitted at least seven calendar days before the issuance date. Closing the SLGS window on May 6 makes it highly likely that there will be no unexpected issuances of SLGS securities beginning on May 16.

Do you need to close the window this early?

There's no statutory or other requirement on the Treasury Department to issue SLGS securities, so it may suspend SLGS sales during a debt limit impasse. In recent years, Treasury gave advance notice of at least one day of its intention to stop accepting subscriptions. Five days' advance notice of the Treasury Department's intention to close the issuance window should allow state and local entities to finish up deals and submit their subscriptions prior to 12:00 noon EDT on Friday, May 6. All subscriptions received prior to 12:00 noon EDT on Friday, May 6 will be honored.

How much headroom will this provide?

SLGS securities count against the debt limit. Closing the SLGS window does not reduce the amount of outstanding debt that counts against the debt limit, but closing the window does stop the further increases in the debt that would be counted against the debt limit if SLGS securities continued to be issued to state and local government entities. Thus, closing the SLGS window does not provide new headroom under the debt limit, but it does conserve the remaining headroom available under the debt limit.

What might the impact be on state and local governments?

Some state and local governments issuing certain types of new debt after May 6 will have to invest the proceeds in alternative assets in order to remain in compliance with tax law. While this will not prevent new municipal bonds from being issued, this will impose some added cost and inconvenience on state and local governments.

Will this create budget issues for already cash-strapped states?

State and local governments are continuing to feel the effects of the recent recession. Although they received significant support from the Federal government over the past two years, the recession forced state and local governments to lay-off public workers and eliminate vital services. As states work to pass new budgets for the 2011-12 fiscal year, they are faced with another set of difficult decisions that will have real effects on their workers and constituents.

The added negative effects of closing the SLGS window are unfortunate and only compound the difficult situation faced by state and local governments.

Will this affect government services?

The added cost and inconvenience of closing the SLGS window will likely not affect the provision of most government services. However, as state and local governments are struggling with extraordinary challenges due to the recent recession, any added cost or inconvenience is unwanted and only make their challenges more difficult.