An expected months-long Treasury Department suspension of sales of state and local government series securities is likely to be most challenging for small issues with short defeasance escrows, market participants said.

The Treasury suspended sales of SLGS on Friday as one of the “extraordinary measures” it takes when the U.S. government reaches its debt limit. The limit was reinstated on Monday after having been suspended since February 2014.

Under the municipal advisor rule, someone who provides particularized advice about escrow investments would be an MA. An underwriter can provide advice about structuring refunding escrow cash flow requirements, but it can’t provide recommendations about what to invest in unless it relies on the independent registered municipal advisor exception, according to the rule. Someone merely providing the brokerage of escrow investments would not be an MA.

Teri Guarnaccia, a partner at Ballard Spahr in Baltimore, said that it’s unlikely that the information an underwriter would provide about purchasing open-market Treasuries would be considered investment advice.

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