Rather than investing the entire reserve fund in a single longer-term security, clients are choosing to purchase a laddered portfolio of securities, scheduled to mature over several years. As each security matures, it can be rolled over and reinvested at then prevailing interest rates
By design, the yields on State and Local Government Series (SLGS) securities are slightly lower than the yields on open market securities (OMS)
While there has since been some speculation that the White House will continue its support of the agreement, it would offer a solution for spending considerations
The shape of the yield curve in the current market continues to remain relatively flat, with minimal differences between short-term rates and long-term rates compared to historical levels
To create room for ongoing funding of government operations, the U.S. Treasury typically takes so called “extraordinary measures” to create room for debt under the debt ceiling. Included in these measures is suspending the sale of State and Local Government Securities (SLGS)
With the SLGS window currently closed and expected to remain so for several more months, issuers of current refunding transactions should consider using open market securities escrows
