Complex sentence: This is the case if debt capital has negligible risk that interest and principal payments will not be made when owed, which implies that tax deductions on the interest expense will be realized in the period in which the interest is paid.
Split into simpler sentences: This is the case if debt capital has negligible risk that interest and principal payments will not be made when owed. The timely interest payments imply that tax deductions on the interest expense will also be realized--in the period in which the interest is paid.