On page 2 of this thread, he said that he wanted to buy $1MM of his city's municipal bonds. That kind of specificity probably precludes the commoditized derivatives market. Assuming for the moment that a lender would entertain his request, he would be exposed to interest rate risk if the borrowing instrument was not fixed and of a duration commensurate with the term of the bonds. The only way he could hedge the risk with a variable rate loan is with an interest rate forward contract or swap, or even a "swaption" to effectively lock in his borrowing rate, but the cost would eat away at the spread he is hoping to pocket. (I suppose that he could take an offsetting position in one of the interest rate futures markets to somewhat lock in his effective borrowing rate, however, I think that would be a less precise, messier alternative.) And that is before even beginning to address the borrowing risk premium associated with his credit worthiness. Besides, in the real world, no lender would allow a borrower to just walk in off the street with no assets or cash flow of his own, and leverage himself to the hilt with the bank's money, using advice he garnered from the internet. Let's try to keep it real, eh?