Strips

Each of the parts in which a fixed-income security can be segregated. A strip comes from the principal (redemption value of a bond) and the rest from the periodic coupons. Each strip is traded independently, on the registered public debt market. This way, a security with explicit yield (the bond or obligation) is transformed into a set of zero coupon securities, with implicit yield. The segregation process is reversible, which means that strips can regroup again forming the initial value. In Spain there is public debt issued in this way; since 1997, government bonds and obligations can be "segregated": from each one, as many securities are extracted as payments entitled to receive (one for each coupon and another for the principal).