The U.S. Treasury Department said it will suspend sales of its state and local government series of non-marketable securities, the first of extraordinary steps it can take to keep funding the government without breaching the nation’s debt limit.
Suspension will start at noon New York time on Feb. 7, the Treasury said in an e-mailed statement today.
The securities, called “slugs,” are sold to states and municipalities so they can comply with federal tax laws and arbitrage rules when they have money to invest from their issuance of tax-exempt bonds.
“This suspension is necessary by reason of the statutory debt limit,” the Treasury said in the statement. “The suspension will assist Treasury’s management of the debt subject to limit.”
A suspension of the federal debt limit, enacted by Congress in October, is scheduled to expire Feb. 7. Treasury Secretary Jacob J. Lew has repeatedly urged Congress to act quickly to raise the cap, saying the government’s ability to meet its obligations will run out before the end of this month.