Certificate Of Government Receipts (COUGRs) Definition
A Certificate of Government Receipts (COUGR) is a U.S treasury Bond sold by the United States Department of Treasury to investors through A.G. Becker Paribas. Investors buy this type of bond at a discount and redeem it at face value. The face value of the bond is paid to investors only at the maturity of the bond.
COUGR is a type of stripped Treasury securities in the U.S, it is called a stripped security because the bond is stripped of its coupon payments, hence, no interest is earned or paid during the life of the bond.
A Little More on What is a Certificate Of Government Receipts (COUGRs)
A Certificate of Government Receipts (COUGRs) makes no coupon payments or interest payments to investors who hold this type of U.S Treasury bond. Investors who buy this bond, expect to receive a face value upon redemption of the bond. There are many stropped U.S Treasury securities that are sold to investors, COURGRs is one of them. Usually, investment firms buy stropped bonds from the Treasury Department as normal bonds, then strip the bond off its coupon payments and sell to investors. The bonds are sold as a discount and are redeemed at a face value. In the case of COUGRs, A.G. Becker Paribas is the investment firm that sells it to investors.
The Family of Stripped Bonds
There are several stripped bonds in the United States, these bonds are offered by the U.S Treasury Department through investment firms who purchase the bonds normal but strip them of their coupon payments before selling to investors. Many investment firms offered stripped Treasury bond in the 1980s, while the Certificate of Government Receipts (COUGRs) was offered by A.G. Becker Paribas, other types of striped bonds are;
- The Lehman Investment Opportunity Notes (LIONs), offered by Lehman Brothers,
- The Treasury Income Growth Receipts (TIGRS) offered by Merrill Lynch, and
- The certificates of Accrual on Treasury Securities (CATS) offered by Salmon Brothers.
Stripped Bonds Compared to Zero-Coupon Bonds
Given that stripped Treasury bonds make no coupon payments to investors during their life, they are often likened to zero-coupon bonds. Both investment offers are redeemed at a face value at the expiration date and both are sold at a discount to investors.
Despite the similarities between stripped bonds and zero-coupon bonds, there are certain differences between the two. While stripped bonds are purchases as normal interest-yielding bonds by investment firms who strip them of coupon payments before selling to investors, zero-coupon bonds are naturally designed to be sold at a discount and redeemed at face value.