Z bond

(redirected from Accrual Bonds)

Z bond

A bond on which interest accrues but is not currently paid to the investor but rather is added to the principal balance of the Z bond and becoming payable upon satisfaction of all prior bond classes.

Z Bond

A bond on which interest accrues but is not paid to the bondholder until maturity. That is, the interest is added back into the principal and further interest is calculated over the new, larger principal. A Z bond is also called an accrual bond. See also: Accretion, Balloon Mortgage.
References in periodicals archive ?
The Wizard prices both accrual bonds (Series I, EE, E and savings notes) and current income bonds (Series HH and H).
For an accrual bond, the Wizard displays how much interest has been earned over the bond's life, and offers yield-to-date interest information and the bond's next accrual and final maturity dates.
The savings bond services of the Reserve Banks include sale and delivery; automated issuance of payroll and promotional bonds; denominational exchanges; exchanges of accrual bonds for income bonds; and reissuance, replacement, and redemption.