It is the second time that ICBC has sold the OTC bonds of China EXIM Bank and the product selected is the well-received discount bond
5bn to the market via the 14-month discount bond
and the 10-year fixed-coupon bond auctions yesterday.
Gain on the disposition of a market discount bond
is deemed to be attributable to market discount to the extent that discount has accrued during the holder's ownership.
However, note restrictions on this treatment of market discount bond
income, including that such bonds may not have a maturity date of one year or less from their date of issue (Sec.
It is worth noting that, under current rules, the holder of a market discount bond
does not have to annually include in gross income the accrued market discount.
However, the market discount bond
rules supersede this general principle.
One-period nominal forward contracts, s periods ahead; these contracts represent a commitment in period t to purchase a one-period nominal discount bond
in period t + s at the pre-specified dollar price [Q.
A pure discount bond
provides its holder with a single payment upon maturity.
A variation is a Deep Discount Bond
with Stepped Interest in which there is a low coupon but it increases in steps each five years.
A unit discount bond
is a financial asset that entitles its owner to one unit of account at maturity without any intermediate coupon payments and without any default risk.
Any bond with a large final payment is partly a pure discount bond
with a significant portion of its return coming in the form of capital gains or losses over time.
6bn), while in preparation the Treasury will be issuing 7-year FRN, 14-month discount bond
and 10-year fixed-coupon bond on April 1 and 2.