Treasury has announced that, after what seemed like a forever
long hiatus, effective August 5, 2019, at 12:00 noon eastern, it
will reopen the SLGs window. Treasury can reopen the SLGS
window because of the enactment of the Bipartisan Budget Act of 2019, which suspends
the application of the federal debt ceiling until July 31,
2021.
But as usual, Congress giveth, and it also taketh away.
Although the sequestration of federal subsidy payments on
direct pay obligations, such as Build America Bonds, was supposed
to end on September 30, 2027, the Bipartisan Budget Act of 2019
extends it by another two years until September 30, 2029.
As a reminder, the sequestration rate changes each federal
fiscal year. Since sequestration began in 2013, the sequestration
reduction rate that applies to subsidy payments on direct pay bonds
has followed a more or less downward trajectory. It started at 8.7%
for the federal fiscal year ending in 2013, but for issuers
requesting
