- General SLGS information
- SLGS Daily Rate Table
- Buying SLGS
- Fedwire Procedures
- Changing a Subscription Before Issue
- Early Redemptions
- Effect of the Public Debt Limit on SLGS
General SLGS Information
What is the State and Local Government Series?
“Treasury Securities – State and Local Government Series” – also known as “SLGS” – are special purpose securities that the Department of the Treasury issues to state and local government entities, upon request by those entities, to assist them in complying with federal tax laws and Internal Revenue Service arbitrage regulations when they have cash proceeds to invest from their issuance of tax exempt bonds. There is no statutory or other requirement for the Treasury Department to issue SLGS, so the Treasury may suspend the sale of SLGS as the debt subject to limit approaches the debt limit.
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 Fiscal Service
Special Investments Branch
P.O. Box 396
Parkersburg, WV 26106-0396
For Overnight Service:
Bureau of the Fiscal Service
Special Investments Branch, HB113
Fiscal Service 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."
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 Fiscal Service, 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 Fiscal Service 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
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.
When can I early redeem a Time Deposit SLGS security?
If you subscribed on or after August 15, 2005, the Bureau of Fiscal Service 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.
Effect of the Public Debt Limit on SLGS
How does the debt limit affect SLGS?
Congress normally sets a limit (the debt limit) on the amount the Government is allowed to borrow. When the debt subject to limit approaches the debt limit, Treasury may suspend the issuance of additional SLGS to delay reaching the debt limit. During past debt limit impasses, new Time and Demand Deposit SLGS sales have been suspended. Consistent with Treasury’s past practice, outstanding Demand Deposit securities will be rolled over into special 90-day certificates of indebtedness. These certificates of indebtedness may be redeemed early according to the same lead time requirements that apply to Demand Deposit securities and will continue to earn simple interest equal to the Demand Deposit daily factor in effect at the time of suspension.
What did Treasury announce regarding SLGS?
The Treasury Department announced on March 6, 2015 that at 12:00 noon ET on March 13, 2015, it will suspend the sale of SLGS until further notice. The Temporary Debt Limit Extension Act (Pub. L. 113-83), signed into law on February 15, 2014 temporarily suspended the statutory debt limit through March 15, 2015. A new debt limit will become effective on March 16, 2015. Treasury is closing the SLGS window in order to assist in 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 signs, legislation raising or suspending the debt limit.
How long does it take to reopen the window once the debt limit is raised or suspended?
Depending on the time of day and the amount of notice given, it will take up to three hours to reopen 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 ten 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 1, 2011
- December 28, 2012 – February 4, 2013
- May 17, 2013 – October 16, 2013
- February 7, 2014 – February 17, 2014
Do you need to close the window this early?
There is no statutory or other requirement on the Treasury Department to issue SLGS securities, so it may suspend the sale of SLGS as the debt subject to limit approaches the debt limit. In line with past practice, Treasury is giving advance notice of its intention to stop accepting subscriptions. All subscriptions received prior to 12:00 noon ET on Friday, March 13, 2015 will be honored.
How much headroom will this provide?
SLGS 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 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.
What might the impact be on state and local governments?
Some state and local governments issuing certain types of new debt after March 13, 2015 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 issuers.
What does the phrase "SLGS suspension" mean?
A SLGS suspension, also known as closing the SLGS window, refers to Treasury no longer accepting new subscriptions for Time and Demand Deposit SLGS securities. In other words, SLGS subscriptions cannot be submitted via SLGSafe (or any other method). Because there is no statutory or other requirement for the Treasury Department to issue SLGS, a SLGS suspension is announced when deemed necessary (see above). Treasury will reopen the SLGS window when Congress enacts, and the President signs, legislation raising or suspending the debt limit.
How does Treasury announce the closing and reopening of the SLGS window?
Treasury press releases announcing the closing or reopening of the SLGS window are posted to www.treasurydirect.gov and www.slgs.gov. SLGSafe administrators may also receive a notice via e-mail. The press release will indicate the time and date of the closing or reopening.
What happens to subscriptions already in SLGSafe when the window closes?
Although not mandated, Treasury’s past practice has been to honor all SLGS subscriptions submitted by the specified time and date of the SLGS suspension, as announced in the respective Treasury press release.
How does a SLGS suspension affect payments?
Unless prohibited for another reason, SLGS maturities, interest payments, and early redemptions will be processed as normal during a SLGS suspension. Early redemptions are subject to the normal restrictions set forth in the regulations.