What is a Discount Bond?

A discount bond is a bond that is issued or sold at a certain discount (at a price lower than the face value) without a specified interest rate or coupon.

Discount bond

Repay the principal at face value when the bond matures,

This type is commonly used in foreign government bonds and financial bonds. The so-called discounted bonds currently issued by the Industrial and Commercial Bank of China are actually discounted bonds with a repayment period of three years and three months, with denominations of 100, 500, and 1,000 yuan. They are issued at discounted prices of 75, 375, 750 yuan. China's treasury bills are usually issued by discount. Most short-term bonds issued by the US government are discounted bonds.