Therefore, unless an issuer expects to satisfy one of the available rebate exceptions, there is little incentive to earn significant amounts of arbitrage. A more practical investment strategy for bond proceeds subject to the rebate requirement is to guarantee a rate of return on the investment greater than the yield on the underlying bond issue, thereby assuring the issuer will earn the maximum legal amount of retainable interest earnings. Guaranteed rate locks in positive arbitrage assuring maximum retainable interest. All coupon payments are immediately reinvested at the coupon rate. The entity reviews all bids, and approves the winner before award.
All draws are at the discretion of the entity.
Confirmations and transaction reports are sent directly to the entity. Positive spread is locked in for the life of the flex, net of fees. Fee is paid by the winning bidder. There is no direct cost to the entity. Flex repos are an easy, widely used investment choice for municipal bond proceeds.