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单词 Negative Arbitrage
释义

Negative Arbitrage
The opportunity lost when municipal bond issuers assume proceeds from debt offerings and then invest that money for a period of time (ideally in a safe investment vehicle) until the money is used to fund a project, or to repay investors. The lost opportunity occurs when the money is reinvested and the debt issuer earns a rate or return that is lower than what must actually be paid back to the debt holders.

Investopedia Says:
As an example, XYZ issuer distributes $50 million in municipal bonds paying 6%. The issuer takes in this money, and then invests it at 4.2% for a period of one year, because the prevailing market will not pay a higher rate. The issuer has lost the equivalent of 1.8% interest that it could have earned or retained.

Related Terms:
Arbitrageur
Fixed-Income Arbitrage
Merger Arbitrage
Municipal Bond
Offering
Risk Arbitrage

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更新时间:2025/3/14 20:11:32