Legal Definitions - non-interest-bearing bond

A non-interest-bearing bond is a type of bond that does not pay any interest to the bondholder. Instead, it is sold at a discount to its face value and the bondholder receives the full face value of the bond when it matures.

For example, a company may issue a $1,000 non-interest-bearing bond that matures in five years. The bond may be sold at a discount for $900, but when it matures, the bondholder will receive the full $1,000.

Another example is a U.S. Savings Bond, which is a type of non-interest-bearing bond issued by the U.S. government. These bonds are sold at a discount and the bondholder receives the full face value of the bond when it matures.

Non-interest-bearing bonds are attractive to investors who are looking for a low-risk investment with a guaranteed return. However, because they do not pay any interest, they may not be suitable for investors who are looking for regular income from their investments.