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:
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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 ...
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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 ...
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Definition of arbitrage bond: Debt security of a municipality or government agency issued outside the provisions of the local taxation regimen and, therefore, ...
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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.
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Jun 12, 2012 ... As subordination and the inevitable cram-down of European sovereign debt becomes increasingly clear, the 'legal-arbitrage' that we were first ...
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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.
- 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 ...
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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 ...