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I am thinking of the cashflows structure of zero-coupon bonds. I am wondering whether they are usually issued below par or at par. It's more natural for me thinking that they are priced below par, but maybe I'm wrong. Thank you in advance.

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There is only one cashflow for the zero-coupon bond. At maturity, it pays the par value.

They are always issued below par, as the buyer is paying the NPV for the bond that matures in the future.

Here is a brief reference at Investopedia.

A zero-coupon bond, also known as an "accrual bond," is a debt security that doesn't pay interest (a coupon) but is traded at a deep discount, rendering profit at maturity when the bond is redeemed for its full face value.

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    $\begingroup$ As @Magnyz remarked in his answer, under negative interest rates a zero coupon bond could be issued/trading above par. $\endgroup$ – LocalVolatility Mar 28 '17 at 22:28
  • $\begingroup$ The OP was "wondering whether they are usually issued below par or at par." I think it's fair to take the words "usually issued" to exclude negative interest rates, which are in the distinct minority, and to exclude off the run bonds. $\endgroup$ – rajah9 Mar 29 '17 at 3:37
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If you have a negative yield which cannot be ruled out nowadays the issueprice will be above par.

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  • $\begingroup$ This does not provide an answer to the question. Once you have sufficient reputation you will be able to comment on any post; instead, provide answers that don't require clarification from the asker. - From Review $\endgroup$ – lehalle Mar 28 '17 at 21:15
  • $\begingroup$ Are you saying that my answer does not provide useful information to the asker? If that is the case I will of course refrain from future comments. FYI, in some markets interest rates are and have been negative for a long time. $\endgroup$ – Magnyz Mar 29 '17 at 23:33
  • $\begingroup$ No @Magnyz : I am just saying a one line answer is a "comment" (you should answer as a "comment"). Please use an "answer" when you answer with a context or details. (It seems odd written like this, but it is just a good practice) $\endgroup$ – lehalle Mar 31 '17 at 10:15
  • $\begingroup$ Ok, I understand. Sorry about that...this was my first attempt to comment on this site. I believe I did try to add a comment but got a message that I was "not senior enough" or similar message to that effect. $\endgroup$ – Magnyz Apr 1 '17 at 13:11

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