capital appreciation bond


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Zero-Coupon Bond

A bond that pays no interest. It is sold at a discount from par and matures at par. These are fairly illiquid investments because they do not benefit from changes in interest rates. However, they tend to be low-risk. Zero-coupon bonds fluctuate in price, sometimes dramatically, with changes in interest rates. Sometimes zero-coupon bonds are issued as such; other times they are bonds stripped of their coupons by a financial institution and resold as zero-coupon bonds. A zero-coupon bond is less formally known as a zero.

capital appreciation bond

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19, 2015) [hereinafter Zero Coupon Bonds], In contrast, a capital appreciation bond is a bond in which the return on the initial principal amount (or purchase value) is reinvested until the bond matures.
Direct debt consists of current Interest bonds, capital appreciation bonds (CABs) and Convertible CABS.
ELEVATED DEBT: Debt levels are elevated and amortization is slow, in part due to the use of capital appreciation bonds (CABs).
Amortization of principal is slow reflecting the use of capital appreciation bonds (CABs).
Direct debt amortization is slow due to the significant use of capital appreciation bonds. After heavy bond issuances between 2008 and 2010, the district reports limited unmet capital needs.
These bonds were issued as capital appreciation bonds with no maturities until fiscal 2022.

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