Bearer Bond

Bearer bond

Bonds that are not registered on the books of the issuer. Such bonds are held in physical form by the owner, who receives interest payments by physically detaching coupons from the bond certificate and delivering them to the paying agent.

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bearer bond

A debt instrument that does not have an owner name listed in the issuer's books or inscribed on the certificate. Because no record of ownership exists, bearer bonds are favored by investors who, illegally, want to avoid paying gift, estate, and local taxes. The issuance of new municipal bonds in bearer form was prohibited beginning in 1983. Also called coupon bond. See also coupon clipping.

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Bearer bond. A bearer bond is a certificate that states the security's par value, the rate at which interest will be paid, and the name of the bond's owner.

In the past, bearer bonds came with detachable coupons that had to be presented to the issuer to receive the interest payments. That practice explains why a bond's interest rate is often referred to as its coupon rate.

Unlike most bonds issued in the United States since 1983, which are registered electronically, a bearer bond isn't registered, and there's no record of ownership. This means it can be sold or redeemed by the person or organization that holds it.

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Bearer Bond

A bond that has no owner's name registered on the books of the issuing company and is therefore payable to the holder.