coupon stripping

coupon stripping

The purchase of ordinary bonds (usually, U.S. Treasury bonds) that are then repackaged such that the receipts to interest and corpus payments are sold separately. The effect is to transform a security paying regular interest into zero-coupon receipts of varying maturities. Sold under a variety of names such as CATS®, LIONS, and TIGRSM, these investments have proved popular for tax-sheltered accounts such as IRAs. Generic names for them include animals and felines. Also called stripping.
References in periodicals archive ?
Forget pork bellies, futures and bond coupon stripping derivatives.
Contrast the need to execute and sometimes record mortgage assignments with coupon stripping and repackaging of mortgage cash flows, book-entry issuance and transfer of mortgage-backed securities (MBS), and electronic funds transfers for purchases of mortgages.
Interest coupon stripping is operational either currently or upon economic justification in 23.
Internal coupon stripping is derived from a technique used by investment banks in 1982 when creating Treasury investment growth receipts (TIGRS) and certificates of accrual on Treasury securites (CATS).
Coupon stripping cannot be carried out effectively unless multiple life products of varying maturities (i.
Insurers with an operational internal coupon stripping process tend to have well-segmented portfolios.
If an insurer implements an internal coupon stripping process, other issues must be managed or planned for but do not preclude the usefulness of the tool.
The only exception is internal coupon stripping, which does require a diversified product line.
excess servicing), the mortgages are "stripped bonds" within the meaning of Code Section 1286(e) (2), the bond coupon stripping rule.