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SLGS Will Soon be Unavailable for Subscription

Are we having fun yet?

To add further stress to the advance refunding issues that everyone is scrambling to close by the end of the year, subscriptions for SLGS  will not be available on or after December 8, if not earlier.

The most recent suspension of the application of the federal debt ceiling expires on December 8, and Congressional leaders have said that Congress will not vote this December either to extend the suspension of the application of the debt ceiling or to increase the ceiling.  Instead, Congress will rely on the Treasury’s use of “extraordinary measures” to defer having to deal with the debt ceiling.

One of these extraordinary measures is the suspension of the sale of SLGS.  In all past instances when Treasury has suspended the sale of SLGS, Treasury has honored subscriptions for SLGS that were made before the suspension took effect, even if the delivery date of the SLGS fell after the suspension date.  We anticipate that the Treasury will continue its historic practice here, but we will not know for certain until Treasury announces the closure of the SLGS window.  Issuers should be prepared to bid for open market securities if a SLGS subscription cannot be made before December 8.

Because there are going to be a crush of advance refunding issues coming to market ahead of the potential December 31, 2017 repeal of tax-exempt advance refundings, issuers should also anticipate some difficulty in attracting at least three bids and/or favorable prices, given the likely volume of advance refunding issues that will be chasing a relatively limited number of providers of open market securities.

© Copyright 2020 Squire Patton Boggs (US) LLPNational Law Review, Volume VII, Number 326


About this Author

Mike Cullers Tax Attorney Squire Patton Boggs Cleveland, OH

Michael Cullers focuses his practice on matters involving tax-exempt bonds and state and local taxation. Michael has extensive experience in the tax aspects of state and local bond issues, including governmental use bonds, qualified 501(c)(3) bonds and other tax-exempt private activity bonds, such as airport financings, as well as tax-advantaged bonds, such as Build America Bonds and qualified school construction bonds. This experience includes private business use and private payment analyses; arbitrage issues in new money, refunding and multipurpose bond issues; multipurpose issue...

John W. Hutchinson Tax Attorney Squire Patton Boggs Houston, TX & New York, NY

Johnny Hutchinson focuses his practice on tax issues relating to public finance.

He has devoted substantial time to all types of tax-advantaged state and local debt, including governmental financings and financings for 501(c)(3) health systems and higher education institutions throughout the country. He also has experience with private activity financings, including solid waste disposal and sewage facilities for large utilities and industrial operations. In addition, Johnny has significant experience with governmental bond and private activity bond financings for airport facilities, including providing tax counsel for the New York Transportation Development Corporation for its US$4 billion tax-exempt bond issue and public-private partnership (P3) to redevelop the main passenger terminal at LaGuardia International Airport.

Johnny has extensive experience with “post-issuance compliance” for tax-advantaged bonds. He has represented issuers before the IRS in audits of all types of tax-advantaged bonds, and he has considerable experience in representing issuers submitting requests to the IRS Voluntary Closing Agreement Program. Working with the elite Squire Patton Boggs Public Policy Practice, Johnny advises clients on pending legislative and regulatory efforts, including drafting new legislation and administrative proposals.

Johnny writes for the Public Finance Tax blog, which is the first blog devoted exclusively to the tax issues that arise in connection with tax-advantaged state and local debt. He also regularly speaks in front of key industry groups.

In each year since 2013, Johnny has been selected for inclusion in Super Lawyers – Rising Stars, a listing of top up-and-coming lawyers. He is also a member of the National Association of Bond Lawyers, where he serves as Chairman of the Tax Law Committee. He also has served as the panel chair for the panel on qualified 501(c)(3) bonds at the National Association of Bond Lawyers seminar known as The Workshop.