Alamo Capital has specialized in zero coupon bond investing since 1987. We run an in-house fixed income trading desk that maintains a competitive zero coupon bond inventory, providing our investors with accessibility to primary and secondary markets and available offerings listed on our Bond On-Line Trading System (B.O.L.T.S.™).
What Is A Zero Coupon Bond?
A zero coupon bond is a bond that does not pay interest during the life of the bond. Also called discount bonds, investors purchase zero coupon bonds at an extreme discount off of the bond’s face-value or par, the amount the bond will be worth upon maturity. Rather than receiving regular coupon or interest payments, the holder of the bond receives the full face-value of the bond upon maturity, which includes interest that has accrued during the bond’s life-cycle.
Zero coupon bonds are issued from a variety of sources, including state and local government agencies, individual corporations and the U.S. Treasury. Zero coupon bonds are subject to capital gains taxes and some zero coupon bonds require investors to pay taxes on the imputed interest that accrues on the bonds each year, even though that interest is not paid until maturity (as part of the bonds’ face-value). Zero coupon municipal bonds and a select group of corporate-issued zero coupon bonds, however, may be tax exempt.
Most zero coupon bonds have long-term maturity dates (10 – 15+ years), although there are short term zero coupon bonds as well, but these are known as bills (the U.S. Treasury bill is an example of a short term zero coupon bond). Due to the fact that no interest is paid on zero coupon bonds during the life of the bond, they are subject to more extreme price fluctuations in the secondary market than many other types of bonds.
Buy Zero Coupon Bonds
If you are interested in buying zero coupon bonds, contact Alamo Capital by phone at (877) 682-5266 – or – (877) 68-ALAMO, by email at [email protected], or by filling out the form below. Our experienced zero coupon bond specialists can provide you with information about the current inventory of zero coupon bonds available for purchase. We can also offer advice related to how zero coupon bonds can fit into a diversified financial portfolio and specifically, how they may meet your unique financial objectives and goals. We can also assist you with obtaining bids on bonds in order to sell or swap in the secondary market.