Treasury STRIPS
Separate Trading of Registered Interest and Principal of Securities of US treasury instruments.
Certain US treasury notes and bonds issued since 1984 are eligible for the “separate trading of registered interest and principal of securities” (STRIPS) programme.
STRIPS are sold at a deep discount from their face value, representing interest income that will be received at maturity.
Their high yield, liquidity, safety and the wide range of maturities make STRIPS attractive to many investment strategies.
As is true of all zero-coupon securities, the market price of STRIPS can be more sensitive to interest rate changes than interest-bearing instruments of a similar maturity.
Interest income on STRIPS is subject to federal income taxes on an actual basis.
