A bond that does not pay a coupon for a certain period of time. After this period, which is usually three to 10 years, coupon payments begin normally. These bonds sell at a discount to par during the time they are not paying coupons.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
A bond that does not pay interest for a specified period, typically three to ten years. At the end of the initial period, the interest payments on the bond begin in accordance with its coupon rate. Deferred-interest bonds generally sell at steep discounts to par during a period of deferred interest.
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.