%0 Journal Article %A Jacques A. Schnabel %T Synthetic Real Return Bonds %D 2013 %R 10.3905/jsf.2013.19.2.059 %J The Journal of Structured Finance %P 59-63 %V 19 %N 2 %X This article proposes a new financial product—synthetic real return bonds. It demonstrates how a real return bond may be synthesized by developing an arbitrage relationship between such a bond and a portfolio composed of a nominal return bond, a set of inflation swaps, and a bank deposit and/or loan. Nominal return bonds issued by national governments may thus be transformed by a private-sector entity into real return bonds. Hence, the problems that render real return bonds problematic as investment and hedging vehicles, namely their scarcity and illiquidity, are ameliorated.TOPICS: Fixed income and structured finance, derivatives applications %U https://jsf.pm-research.com/content/iijstrfin/19/2/59.full.pdf