WHAT ARE THE POPULAR FEATURES OF TIGRS, CATS, AND LIONS?

The popularity of zero coupon bonds based on coupon-stripped Treasury securities led to a proliferation of animalesque brand names in the few years they were being created, and moved the Treasury to create a system to make issuing them safer for investors and easier for brokerage firms. The felines were popular because they allowed investors to participate in the earnings and safety of Treasury bonds without the expense and potential shortcomings.

Even though the feline bonds were issued by private firms, which ultimately had the obligation to repay them, the fact that they were backed by U.S. Treasury bonds gave them a relatively high degree of security. And that security could be yours at a price you could afford—a fraction of the tens of thousands of dollars needed to purchase Treasury bonds. There was another degree of comfort added by the fact that the felines were zero coupons—they could never be called, meaning that you could count on your return if you held the bonds to maturity.

But of course, you did not have to hold them to maturity. An active and volatile secondary market exists for Treasury-backed zeros, which is why those TIGRs, CATS and LIONs that have not matured still stalk the bond markets today.