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NEW YORK (The Deal) -- The Treasury Secretary Jack Lew is expected to opine on tax inversions next week, a subject that has been a major issue for risk arbitrage spreads.

The issue at hand is whether, in the absence of action from Congress, the Treasury might make some moves that could limit the way corporations can take advantage of inversions, such as limiting deductions on interest payments in U.S. entities and other actions. Treasury has been keeping its position close to the vest and Lew will probably not offer much detail next week, an attorney said. But the department is likely to issue regulations later this month that will address debt interest deductions and repatriations, he said.

The spread on the Covidien (COV)  merger with Medtronic (MDT)  Thursday was $8.50, or 9.7%.

Shire (SHPG)  merger with AbbVie (ABBV)  traded at $27.90 11.3%.

The Treasury Department is likely to take some action this month and that could be laid out next week, a risk arbitrageur said. The Shire deal makes sense without the tax advantages of an inversion, the arb said. Regardless of what Treasury might do, that deal will close, he said.

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Spreads on inversion deals could widen on Lew's actions, but a lot of the risk is priced into the deals already, another arb said.

The Shire deal is expected to reduce Abbvie's tax rate and that is a major issue, but the companies have also presented the deal on a strategic basis that goes beyond the tax benefit, and the merger is not contingent on the tax benefit, an arb said.

The ability to deduct interest on debt left in U.S. entities through conversions is likely to face challenges, an attorney said.

There is not going to be any congressional action, arbs said. The Treasury might do something but there is a good chance that action won't happen before the elections and the Shire deal will close by December ahead of the Covidien merger, an arb said.

Treasury Department officials did not return a call.