QUICK DEFINITION
Discount Bond is a bond trading below its face value.
WHY IT MATTERS
Why Discount Bond matters in bond markets
A discount can arise because market yields exceed the bond's coupon, because of credit concerns or because of structural features.
MARKET CONTEXT
How to think about it
Bond investors use discount bond as part of a wider framework that links prices, yields, cash flows, liquidity and risk. The concept should therefore be read together with its related terms rather than as an isolated definition.
Is Discount Bond important for fixed-income investors?
← Back to the Bond Market Glossary Yes. A discount can arise because market yields exceed the bond's coupon, because of credit concerns or because of structural features.