Guaranteed Coupon Reinvestment Bonds

A bond or note structure which gives the holder a series of options to receive each interest coupon in cash or to reinvest it in the same bond at par on the interest payment date. A holder electing to reinvest all coupons in this manner would create the equivalent of a zero coupon bond. The appeal of the guaranteed coupon reinvestment bond is that it gives a holder flexibility to avoid the reinvestment risk associated with having to reinvest coupons at lower rates than the original yield on the bond. Also called Bunny Bond.

Glossary * G