Texas school debt deluge will have triple-A wrap as PSF limit is raised

Texas school districts, flush with new bond authorizations over the last year, are breathing a sigh of relief now that a cost-saving state guarantee program for their debt is fully back in business after the Internal Revenue Service increased its capacity for the first time since 2009. 

In a last week.

The IRS notice on its proposed regulation, which “may be relied upon for bonds sold on or after May 10, 2023,” acknowledged “certain perpetual trust funds that otherwise could provide credit enhancement under the special exception to the arbitrage restrictions for eligible pledged funds … will soon be limited in their capacity to provide guarantees for tax-exempt bonds at a time when there is a significant need for such guarantees.”

A July 31 deadline was set by the IRS for comments on any questions related to Notice 2023-39.