Zero-coupon bond

A zero-coupon bond is a debt instrument that does not pay interim coupons but instead trades at a deep discount, rendering profit at maturity, when the bond is redeemed for its full face value. Nagad, which acts as the main agent for mobile financial services (MFS) of Bangladesh Postal Office (BPO), plans to raise Tk 500 crore through a zero-coupon bond to pay its loans, develop networks and buy IT equipment for business expansion. The company said investors of the bond would get Tk 750 crore at the end of its five-year maturity period. With a paid up capital of Tk 3.5 crore. Nagad wants to raise the capital to pay off existing debts, support capital expenditure and meet working capital requirements to expand its business in the MFS sector, which has been growing fast since it was launched in Bangladesh in 2011.