Buffett talked about a high level arbitrage: 1) borrowing with zero-coupon bonds with x% effective interest rate, 2) buying preferred shares with x+y% coupon w/ a conversion option in the future.
Buffett also criticized the prevalence of zero coupon bonds, which can easily let borrowers overborrow, and lenders may book unrealistic “profits”.
There is also an interesting discussion of “deferred tax liabilities”, which is essentially an interest-free loan by gov.