Arbitrage Services

2026-11-03

3 . 1 . Review of Bond Issuances • Collection of Relevant Data : Analyze all necessary data related to the tax - exempt municipal bonds , including the offering document , bond interest rates , maturity schedules , and bond issuance costs . 3 . 2 . Calculation of Arbitrage Yield • Bond Yield Calculation : Calculate the yield of the tax - exempt bond ( s ) based on the bond ' s interest payments and other terms . • Investment Yield Calculation : Calculate the yield on the investments made with the bond proceeds ( taxable securities , investments , etc .) to assess if the bond proceeds have been invested in securities that generate a higher yield than the tax - exempt bond . • Yield Comparison : Compare the tax - exempt bond yield with the yield on the investment of the proceeds . 3 . 3 . Arbitrage Rebate Calculation ( if applicable ) • Rebate Analysis : Determine if arbitrage rebate is owed based on the yield on investments exceeding the tax - exempt bond yield . • Investment Earnings Review : Identify any arbitrage earnings , which are the differences between the yield on the investments and the yield on the municipal bonds . • Compliance Period : Evaluate compliance with the rebate requirement over the applicable compliance period ( usually 5 years ), considering the total arbitrage rebate owed to the IRS . 3 . 4 . Yield Restriction Compliance • Examine Compliance with IRS Rules : Ensure that the issuer has adhered to the IRS regulations regarding yield restrictions , especially in relation to bond proceeds that are not subject to rebate but must still meet yield restrictions . • Document Findings and Adjustments : Document any findings , adjustments , or excess earnings that could potentially result in penalties or require yield reduction payments to the IRS . 3 . 5 . Documentation and Reporting • Prepare Detailed Report : Provide a comprehensive report detailing all calculations , findings , and recommendations , including : o Summary of bond terms and investment details o Arbitrage yield calculation o Arbitrage rebate analysis o Yield restriction compliance status to conform with 3 . 4 • Recommendations : Offer suggestions for future compliance or adjustments , if necessary . • IRS Form 8038 - T Filing : If arbitrage rebate or yield reduction is owed , prepare the IRS Form 8038 - T for submission .

Maryland

2026-05-02