Finshots Daily An explainer on STRIPS bonds
6 snips
Dec 13, 2024 Discover the intriguing world of STRIPS bonds, a unique asset class that offers flexibility and stability for investors. Learn how these securities separate principal and interest payments, making them an attractive option for insurance and pension funds. The discussion highlights their growing popularity among both institutional and retail investors in India as effective tools for managing long-term financial commitments.
AI Snips
Chapters
Transcript
Episode notes
G-Secs STRIPS Popularity
- G-Secs STRIPS, zero-coupon bonds, are gaining popularity.
- Insurance and pension funds are driving demand, with trading volume increasing significantly.
STRIPS Bonds Explained
- STRIPS (Separate Trading of Registered Interest and Principal of Securities) splits bonds into interest and principal components.
- Each part is sold at a discount as a zero-coupon bond, offering flexibility.
STRIPS Bond Advantages
- Investors gain flexibility by buying/selling parts of bonds to match goals.
- Demand for separated parts can exceed the whole bond's value, benefiting sellers.