DEFINITION of 'Treasury Receipt'

A zero-coupon bond that doesn't pay interest at regular intervals between the date of issue and maturity, but instead accrues the interest and pays it with the principal at maturity. Treasury receipts are sold by an intermediary, such as a brokerage firm, that issues a receipt to the purchaser representing the underlying treasury securities.

BREAKING DOWN 'Treasury Receipt'

Treasury receipts have many different acronyms, including: STRIPS (Separate Trading of Registered Interest and Principal Securities), CATS (Certificates of Accrual on Treasury Securities), TIGRs (Treasury Investment Growth Receipts) and COUGRs (Certificate of Government Receipts). Generally, the receipts were created when a brokerage house would separate the coupon from the principal of a Treasury bond or certain mortgage-backed security bonds, and repackage them so that the principal and coupon were paid at maturity, a process that was permitted by the 1986 Tax Act. Now, the Treasury Department can issue its own zero-coupon bonds, lessening the appeal of the brokerage receipts.

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