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Corporate Structure Arb
Hello, I would veru much like to know more about this arb.Any books, papers, literature i should hv a look at? thx
Corporate Structure Arb
The below thesis is a good starting point for refs.http://www.hec.unil.ch/cms_mbf/master_t ... 307.pdfThe idea of this strategy is actually quite simply; you trade say the equity against debt of a company. For example, if you expect a company to go bankrupt, sell equity and buy debt (simplistically speaking); because in default equity is worthless (at least theoretically) whereas debt-holders take over the company. Then the thing gets moer complicated because companies issue a lot of different debt and equity instruments and you can trade the whole lot.
Corporate Structure Arb
any more infor like that? I cant find much on the web
Corporate Structure Arb
It's called "Capital Structure Arbitrage". If you're expecting prosperity, you'd want to buy the stock and short-sell the bonds. You might actually make money on both legs of the spread which can lead to more spreading opportunities!