Agio

Think: agitation for buyers of bonds.

The coupon of the bond was 6%, and the bankers wanted to sell bonds for Gillette right around par. But during the road show, management gave such a compelling case for the future of shaving going well beyond just men's faces, that investors got excited and bid up the price of the bond.

As a result, the bond premium ended up trading for 104% of par, or rather, $1,040/unit, which still paid $30 twice a year, or $60 annually. It meant that bond holders, in paying a premium for the bond value, received somewhat less than the 6% yield they had hoped they would be getting from their favorite razor company.

The 4% above market, or above par premium of those bonds is called agio. No relation to the farmer who had the dog...and you know his name-o.