deep-discount bond

Deep-discount bond

A bond issued with a very low coupon or no coupon that sells at a price far below par value. A bond that has no coupon is called a zero-coupon bond.

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deep-discount bond

1. A long-term debt security that, because of a low coupon rate of interest compared with current rates of interest, sells at a substantial discount from face value. Bonds of this type, if not originalissue discounts, are preferred by some investors because they are unlikely to be called before maturity. See also municipal convertible, zero-coupon bond.

2. See original-issue discount bond.