(Un)Calculated Risk | by Peter Orr of Intuitive Analytics

Refunding PV Savings - Arbitrage Yield or Zero Rates?

Posted by David De la Nuez on Mar 29, 2012

"If we don't change direction soon, we'll end up where we're going" - Professor Irwin Corey

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Minimize Refunding Negative Arbitrage or Maximize Savings?

Posted by Peter Orr on Mar 19, 2012

"Don't ever get your speedometer confused with your clock, like I did once, because the faster you go, the later you think you are."  - Jack Handey, Deep Thoughts

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Refunding Efficiency: Not the Holy Grail of Decision Criteria

Posted by Peter Orr on Mar 24, 2010

Lots has been studied and even reported on the decision criteria involved in pulling the trigger on a public finance refunding. When is the right time? What bonds do I choose? What savings target do I use? The old rule of thumb that present value (pv) savings should be at least 3% of refunded par is taking some criticism which I won't repeat here. Suffice it to say it's a threshold originally conceived by bankers and as such, the bar for a "Go" decision is not very high. I personally think it's age discrimination; this calculation does have a good three decades under the belt...

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