The sale of State and Local Government Series securities--a place for issuers to park escrowed bond proceeds--was halted when Congress failed to raise the federal debt limit before its October recess. No new orders for SLGS could be filled until Congress acted. So issuers of refundings had to worry about where to invest the proceeds of the new bonds before the old bonds could be repaid--and not run afoul of arbitrage rules.
The SLGS suspension followed the Internal Revenue Service's announcement that it plans 90 audits of tax-exempt bond deals to make sure issuers are abiding by the rules governing advance refunding escrows.
