STRIPS
Business & Finance abbreviation · Bond & Fixed-Income
| Stands for | Separate Trading of Registered Interest and Principal of Securities |
|---|---|
| Categories | Business & Finance |
STRIPS stands for Separate Trading of Registered Interest and Principal of Securities, a bond & Fixed-Income abbreviation.
US Treasury program that lets eligible notes and bonds be split into separate zero-coupon securities, one for each interest payment and one for the principal, which trade independently. They are bought at a discount and pay face value at maturity.
Example: The insurer bought 25-year STRIPS to fund a single large payout due in 2050.
Usage notes
Introduced in 1985, STRIPS are created and reconstituted by financial institutions through the Federal Reserve's book-entry system. Because they pay no coupons, their prices are very sensitive to interest rates. US holders owe tax each year on imputed interest, so STRIPS are often held in tax-advantaged accounts.
Related abbreviations
More bond & Fixed-Income abbreviations
- NRSRO – Nationally recognized statistical rating organization
- OAS – Option-adjusted spread
- OAT – Obligation assimilable du Trésor (French Treasury bond)
- OIS – Overnight index swap
- SOFR – Secured Overnight Financing Rate
- SONIA – Sterling Overnight Index Average
- T-bill – Treasury bill
- T-bond – Treasury bond
- T-note – Treasury note
- TIPS – Treasury Inflation-Protected Securities
- TRS – Total return swap
- UST – United States Treasury securities