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During a career that has spanned more than 20 years, Jeff Drobny has gained significant expertise in commodity trading, risk management, and bond arbitrage. Jeff Drobny established the company’s North American Fixed Income Arbitrage trading division.
Bond arbitrage is a technique most often used by municipalities looking to take advantage of a pricing difference between two markets, for instance, acquiring and investing in a debt security bond with a lower interest rate prior to the introduction of a higher rate. Bond arbitrage is particularly popular during periods of decline in bond yields and interest rates, though the process is only worthwhile if the difference between rates is significant. The tax exemption status attributed to most arbitraged bonds makes them especially attractive, though bonds can only remain exempt from taxation when all net sales and investment proceeds are put towards future projects. The cancellation or delay of said project can result in the bond’s forfeiting its tax-exempt status.
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AuthorJeff Drobny serves as a principal and a chief investment officer with Black River Asset Management, an investment company with 13 offices in 11 countries. Archives
September 2017
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