Created in the 1970s and used by companies seeking to maximize their immediate Cash flow and investors keen to avoid taxation. These are bonds which carry little or no interest but are sold by the issuing company at a price well below their face value. Français: Obligations très largement escomptées Español: Bono de descuento intensivo, pagaré de descuento intensivo
Bonds issued at a discount to par value and redeemed at par or a premium to par. They may either pay a low coupon over their lives (low coupon bonds) or no coupon at all ( zero coupon bonds). The difference between the issue price and the redemption price is effectively interest on the amount borrowed.
those bonds, sold at a large (deep) discount from face value, pay low cash coupons. They are beneficial for investors keen to fix their return over the life of the bond. An investor buys deep discount bonds at substantially less than face value and receives the capital gain on the investment when the bonds mature. There is no tax benefit attached for investors because tax has to be paid on interest as it is accrued rather than received. Zero coupon bonds are the ultimate example of deep discount bonds.