zero-coupon bond

(redirected from capital appreciation bond)
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Noun1.zero-coupon bond - a bond that is issued at a deep discount from its value at maturity and pays no interest during the life of the bondzero-coupon bond - a bond that is issued at a deep discount from its value at maturity and pays no interest during the life of the bond; the commonest form of zero-coupon security
governing, government activity, government, governance, administration - the act of governing; exercising authority; "regulations for the governing of state prisons"; "he had considerable experience of government"
corp, corporation - a business firm whose articles of incorporation have been approved in some state
bond certificate, bond - a certificate of debt (usually interest-bearing or discounted) that is issued by a government or corporation in order to raise money; the issuer is required to pay a fixed sum annually until maturity and then a fixed sum to repay the principal
zero coupon security, zero-coupon security - a security that makes no interest payments but instead is sold at a deep discount from its face value
References in periodicals archive ?
A capital appreciation bond is sort of like a zero-coupon bond, but instead of being sold at a discount from the face value, the bond is sold as returning a fixed rate of interest.
This is possible due to a 2008 vote that allowed the district to borrow more money to finish a $500 million reconstruction project to modernize and expand the 24 oldest schools in the district that began in 2003, but did not permit the school board to increase taxes, leading to an expensive, controversial loan known as a capital appreciation bond. By 2051, the district must pay investors more than $981 million total, almost 10 times what they borrowed.
Year-10 leverage remains elevated at 9.6x before gradually declining as principal and capital appreciation bond accretion are retired.
Given the project debt's back loaded nature and the accreting principal amount of the Capital Appreciation Bonds, leverage is initially high and averages 8.6x for the first 10 years after ramp-up.
Much of the concern about school district debt has focused on the use of a controversial financing tool called capital appreciation bonds, or CABs.
Headlined "California School Finance Upgrades by Making the Next Generation Pay," it describes a financing device called "capital appreciation bonds" that enables school districts to borrow building funds for which they can delay "payment for years, or even decades." For one loan, the Poway Unified School District has borrowed $105 million that it does not have to begin repaying for twenty years.

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