Zero‑Coupon Bond

Current Context : In mid‑2025, Power Finance Corporation withdrew its plan to issue a zero‑coupon bond, reflecting changing market conditions.

ABOUT ZERO‑COUPON BOND

• Definition: A debt instrument sold at a deep discount without periodic interest payments; redeemed at face value at maturity.
• Characteristics:
  • No coupon: All return arises from difference between purchase price and face value.
  • Interest‑rate sensitivity: Price fluctuates significantly with market rates.
• Use in India: Raised funds for infrastructure by government‑owned enterprises.