Exchange Currency

arbitrage bond

A bond issued by a municipality to take advantage of a disparity in interest rates between two different debt instruments. For example, a municipality issues an arbitrage bond at a lower interest rate and for a shorter term than one of its own existing debt securities. It then might use the assets raised by the arbitrage issue to buy Treasury securities that are paying a higher interest rate than its own issue. Prior to maturity of its own higher-rate issue, the municipality will sell the Treasury securities and pay off the debt on the arbitrage bond, profiting from the difference.

Related information about arbitrage bond:
  1. Arbitrage Bond Definition | Investopedia
    A debt security with a lower interest rate issued by a municipality prior to the call date of the municipality's existing higher-rate security. Proceeds from the ...
     
  2. Arbitrage Bond - Financial Dictionary - The Free Dictionary
    A municipal bond issued at a lower interest rate than another municipal bond. The funds from the second bond are invested in treasury securities until the call ...
     
  3. What is arbitrage bond? - BusinessDictionary.com
    Definition of arbitrage bond: Debt security of a municipality or government agency issued outside the provisions of the local taxation regimen and, therefore, ...
     
  4. What is arbitrage bond? Definition and meaning - InvestorGuide.com
    arbitrage bond - definition of arbitrage bond from InvestorGuide.com: A bond issued by ... For example, a municipality issues an arbitrage bond at a lower interest r.
     
  5. The Spanish 'Legal-Arbitrage' Bond Trade Is On | ZeroHedge
    Jun 12, 2012 ... As subordination and the inevitable cram-down of European sovereign debt becomes increasingly clear, the 'legal-arbitrage' that we were first ...
     
  6. g. allocation and accounting regulations for arbitrage bonds
    bond, any arbitrage bond and any bond that does not meet the requirements of ... arbitrage analysis was complete and the bond was not an arbitrage bond.
     
  7. Module M Arbitrage - Internal Revenue Service
    This section defines an arbitrage bond, provides the student with the general rule for treating interest on an arbitrage bond, and provides the statutory provisions ...
     
  8. What Is an Arbitrage Bond?
    An arbitrage bond is a certain type of bond often issued from a municipality or local government in order for that municipality or local government to take ...