Bonds in REPO: interim income maximization

To get a large interim income at an acceptable risk the most viable way is to purchase Eurobonds with a big coupon. Market price of a good quality bond in such a case will be higher than notional, and maturity price will be lower than current.

Thus, the "reduced" final payment is compensated by an increased quarterly revenue.

There is no obligation to wait for the maturity bonds date, as NAC (accrued coupon interest) is calculated on daily basis, and the owner of the bond gets paid for every day of the quarter he actually held a bond, even in the case of early sale.