stepped coupon bond

(redirected from Dual Coupon Bonds)

Stepped Coupon Bond

A callable bond issued with a low coupon rate that gradually increases over the life of the bond. The increases occur at regular intervals stated in the bond indenture. It is also called a step-up coupon security or a dual coupon bond
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stepped coupon bond

A bond with interest coupons that change to predetermined levels on specific dates. Thus, a stepped coupon bond might pay 9% interest for the first 5 years after issue and then step up the interest every fifth year until maturity. Issuers often have the right to call the bond at par on the date the interest rate is scheduled to change. Also called dual coupon bond, rising-coupon security, step-up coupon security.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.