Suspension of slugs unlikely to affect U.S. muni credit quality-S&P

NEW YORK Thu May 16, 2013 1:58pm EDT

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NEW YORK May 16 (Reuters) - The latest U.S. Treasury suspension of state and local government series securities, known as slugs, is not likely to affect municipal credit quality, Standard & Poor's rating services said on Thursday.

The Treasury on Wednesday suspended slugs as the first of a series of potential emergency cash measures to allow the government to keep paying the nation's bills once a temporary suspension of the debt ceiling lapses this weekend.

Slugs are low-interest Treasury securities offered to state and local governments to invest proceeds from municipal bond sales. They have been suspended eight times over the last 20 years to avoid hitting the debt ceiling, most recently last December.