Treasury Investment Growth Receipts - TIGRs

No, not Pooh’s feline friend. We’re talking Merrill Lynch’s TIGRs.

In the early 1980s, interest rates were falling, making the demand for notes and bonds go up. Since interest rates were on the downtick, investors cared more about bond payouts at maturity rather than coupon payments.

It was a ripe time for TIGRs (Treasury Investment Growth Receipts) to be born. Merrill Lynch made these zero coupon pseudo-Treasury bonds, which were sold at a deep discount in exchange for the lump sum at maturity. You could get TIGRs straight from ML, or on secondary markets.

TIGRs are pseudo-Treasury bonds, since Merrill Lynch basically bought a bunch of coupon-bearing Treasury securities, and then funneled that value into its own zero coupon TIGR securities, which were hotter on the market at the time.

Until...the U.S. Treasury got a whiff, and started making their own zero-coupon bonds called Separate Trading of Registered Interest and Principal of Securities (STRIPS). In 1986, Merrill Lynch laid TIGRs to rest. Oh, Pooh.