Municipal Derivative

A variety of structures have been designed to accommodate the financing requirements of non-sovereign government units and investors in their debt. The fact that most local government debt is exempt from federal taxation in the United States has important implications for this market. Among the more popular structures are INFLOS/SAVRs or RIBs/SAVRs created by dividing a fixed rate payment into coupons for an issue that is half inverse floating rate notes and half traditional floating rate notes. See INverse FLOating Security (INFLOS).

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