{"id":20287,"date":"2019-04-04T09:00:18","date_gmt":"2019-04-04T14:00:18","guid":{"rendered":"https:\/\/breakingintowallstreet.com\/biws\/kb\/%kb_category%\/original-issue-discount-oid-on-debt-issuances-1243\/"},"modified":"2024-09-14T20:51:38","modified_gmt":"2024-09-15T01:51:38","slug":"original-issue-discount-debt","status":"publish","type":"biws_kb","link":"https:\/\/breakingintowallstreet.com\/kb\/debt-equity\/original-issue-discount-debt\/","title":{"rendered":"Original Issue Discount Debt (OID) Tutorial (12:43)"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_81 counter-flat ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Original Issue Discount Debt (OID) Tutorial<\/p>\n<span class=\"ez-toc-title-toggle\"><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/breakingintowallstreet.com\/kb\/debt-equity\/original-issue-discount-debt\/#What_is_Original_Issue_Discount_Debt_OID\">What is Original Issue Discount Debt (OID)?<\/a><\/li><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/breakingintowallstreet.com\/kb\/debt-equity\/original-issue-discount-debt\/#Walkthrough_of_Original_Issue_Discount_OID_Amortization\">Walkthrough of Original Issue Discount (OID) Amortization<\/a><\/li><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/breakingintowallstreet.com\/kb\/debt-equity\/original-issue-discount-debt\/#More_Advanced_Walkthrough_Original_Issue_Discount_with_Debt_Principal_Repayments\">More Advanced Walkthrough: Original Issue Discount with Debt Principal Repayments<\/a><\/li><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/breakingintowallstreet.com\/kb\/debt-equity\/original-issue-discount-debt\/#Does_Original_Issue_Discount_OID_Truly_Matter\">Does Original Issue Discount (OID) Truly Matter?<\/a><\/li><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/breakingintowallstreet.com\/kb\/debt-equity\/original-issue-discount-debt\/#Recap_and_Summary\">Recap and Summary<\/a><\/li><\/ul><\/nav><\/div>\n\n<h2><span class=\"ez-toc-section\" id=\"What_is_Original_Issue_Discount_Debt_OID\"><\/span><strong>What is Original Issue Discount Debt (OID)?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<blockquote><p><strong>Original Issue Discount Definition:<\/strong> Original Issue Discount refers to when a company issues Debt at <em>a discount to par value<\/em>. For example, a bond is worth $100 (the \u201cface value\u201d that the company pays interest on), but the company issues it for $90, which lets investors buy the bonds at a 10% discount and still earn interest based on the $100.<\/p><\/blockquote>\n<p>A company might do this, or have to do this, because:<\/p>\n<p><strong>1) The bond\u2019s coupon rate (interest rate) is below the rates of other, similar bonds<\/strong>, and the company needs to incentivize investors to buy it even though the investors could earn higher interest elsewhere. In other words, it&#8217;s a way to boost the <a href=\"https:\/\/breakingintowallstreet.com\/kb\/debt-equity\/bond-yield\/\" target=\"_blank\" rel=\"noopener\">bond yield<\/a> or <a href=\"https:\/\/breakingintowallstreet.com\/kb\/debt-equity\/yield-to-maturity\/\" target=\"_blank\" rel=\"noopener\">Yield to Maturity<\/a>.<\/p>\n<p><strong>2) Investors have doubts about the company\u2019s credit quality<\/strong> and ability to eventually repay the bond upon maturity (or to refinance and replace it with another bond).<\/p>\n<p>When a company issues a bond at a discount to par value, <strong>the company amortizes this discount on the financial statements<\/strong> and increases the Book Value of Debt on the Balance Sheet until it reaches Par Value upon maturity.<\/p>\n<div class='code-block code-block-2' style='margin: 8px 0; clear: both;'>\n<div class=\"kb-adinsert-modal\">\n    <div class=\"kb-adinsert-top\">\n      <div class=\"media\">\n          <img decoding=\"async\" class=\"alignnone size-full wp-image-28448\" src=\"https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2024\/04\/24164120\/adv-fm-tile.png\" alt=\"PowerPoint Pro\" width=\"128\" height=\"128\" \/>\n      <\/div>\n      <div class=\"content\">\n          <h3>Master Financial Modeling for Investment Banking With <strong>BIWS Core Financial Modeling<\/strong><\/h3>\n      <\/div>\n    <\/div>\n    \n    <div class=\"full_text\">\n    \t<ul>\n        \t<li>\n            \t<h4>Become a financial modeling pro<\/h4>\n              <p>158 videos, detailed written guides, Excel files, quizzes, and more<\/p>\n\t\t\t    <\/li>\n          <li>\n          \t<h4>Complete 10+ detailed global case studies<\/h4>\n            <p>These include both the theory and the practical applications<\/p>\n\t\t\t    <\/li>\n          <li>\n          \t<h4>Prepare for your internship or full-time job<\/h4>\n            <p>Gain the skills you need to \u201chit the ground running\u201d on Day 1\n\n<\/p>\n\t\t\t  <\/li>\n      <\/ul>\n        \n      <a class=\"cta-link orange-button-medium\" href=\"https:\/\/breakingintowallstreet.com\/core-financial-modeling\/\" target=\"_blank\">Full Details<\/a>\n      \n      <a class=\"cta-link orange-button-medium bg-blue\" href=\"https:\/\/biws-support.s3.us-east-1.amazonaws.com\/Course-Outlines\/Core-Financial-Modeling-Course-Outline.pdf\" target=\"_blank\" rel=\"noopener\">Short Outline<\/a>\n    <\/div>\n<\/div><\/div>\n\n<h3><strong>Files &amp; Resources:<\/strong><\/h3>\n<p><a href=\"https:\/\/youtube-breakingintowallstreet-com.s3.amazonaws.com\/Original-Issue-Discount.xlsx\" target=\"_blank\" rel=\"noopener\">Simple Example of Original Issue Discount (OID) on the Financial Statements (XL)<\/a><\/p>\n<p><a href=\"https:\/\/youtube-breakingintowallstreet-com.s3.amazonaws.com\/Original-Issue-Discount-Slides.pdf\" target=\"_blank\" rel=\"noopener\">Original Issue Discount (OID): What It Means and How It Works on the Financial Statements (PDF)<\/a><\/p>\n<h3><strong>Video Table of Contents:<\/strong><\/h3>\n<p><strong>0:51:<\/strong> The Short, Simple Answer<\/p>\n<p><strong>4:04:<\/strong> The Longer Answer \u2013 OID on Debt with Principal Repayments<\/p>\n<p><strong>10:28:<\/strong> Recap and Summary<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Walkthrough_of_Original_Issue_Discount_OID_Amortization\"><\/span><strong>Walkthrough of Original Issue Discount (OID) Amortization<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>In the example above, for Debt with a Face Value of $100, a 10% Coupon Rate (i.e., a fixed interest rate of 10%), a 5-year maturity, no principal repayments until maturity, and an Original Issue Discount of $10:<\/p>\n<p><strong>Cash Interest per Year<\/strong> = $100 * 10% = $10 (based on Face Value * Coupon Rate)<\/p>\n<p><strong>OID Amortization<\/strong> = $10 \/ 5 = $2 (based on Original Issue Discount \/ Maturity)<\/p>\n<p>On the Balance Sheet, the company initially records Debt of $90 (its Book Value, which equals Face Value \u2013 Original Issue Discount), and it increases this number by $2 per year as the OID amortizes.<\/p>\n<p>The Face Value of the Debt remains the same, at $100, <strong>because discounts, premiums, and issuance fees never affect the Face Value of Debt.<\/strong><\/p>\n<p>The company still pays Interest based on this $100 Face Value, so the Cash Interest stays the same each year because the Face Value and Coupon Rate are both fixed.<\/p>\n<p>On the <a href=\"https:\/\/breakingintowallstreet.com\/kb\/accounting\/income-statement\/\" target=\"_blank\" rel=\"noopener\">Income Statement<\/a>, both the Interest Expense and Amortization of OID appear under the \u201cInterest Expense\u201d category ($12 in total), which reduces Pre-Tax Income, Taxes, and Net Income.<\/p>\n<p>Here it is in Excel:<\/p>\n<p><center><img decoding=\"async\" class=\"aligncenter wp-image-20772 size-full\" title=\"Original Issue Discount - Simple Example on the Income Statement\" src=\"https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2019\/04\/19075804\/Original-Issue-Discount-01.jpg\" alt=\"Original Issue Discount - Simple Example on the Income Statement\" width=\"952\" height=\"814\" srcset=\"https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2019\/04\/19075804\/Original-Issue-Discount-01.jpg 952w, https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2019\/04\/19075804\/Original-Issue-Discount-01-300x257.jpg 300w, https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2019\/04\/19075804\/Original-Issue-Discount-01-768x657.jpg 768w\" sizes=\"(max-width: 952px) 100vw, 952px\" \/><\/center>On the Cash Flow Statement, Net Income is slightly lower as a result of the Amortization of OID, but since it is a non-cash expense, similar to Depreciation, we add it back in Cash Flow from Operations:<\/p>\n<p><center><img decoding=\"async\" class=\"aligncenter wp-image-20773 size-large\" title=\"OID - Cash Flow Statement\" src=\"https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2019\/04\/19075803\/Original-Issue-Discount-02-1024x247.jpg\" alt=\"OID - Cash Flow Statement\" width=\"1024\" height=\"247\" srcset=\"https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2019\/04\/19075803\/Original-Issue-Discount-02-1024x247.jpg 1024w, https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2019\/04\/19075803\/Original-Issue-Discount-02-300x72.jpg 300w, https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2019\/04\/19075803\/Original-Issue-Discount-02-768x185.jpg 768w, https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2019\/04\/19075803\/Original-Issue-Discount-02.jpg 1051w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/center>If this company had issued the Debt at a Book Value of $100 \u2013 no OID \u2013 rather than $90 \u2013 here\u2019s how Free Cash Flow would have changed:<\/p>\n<p><center><img decoding=\"async\" class=\"aligncenter wp-image-20774 size-full\" title=\"OID - Cash Flow Statement with Discount Included\" src=\"https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2019\/04\/19075802\/Original-Issue-Discount-03.jpg\" alt=\"OID - Cash Flow Statement with Discount Included\" width=\"831\" height=\"93\" srcset=\"https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2019\/04\/19075802\/Original-Issue-Discount-03.jpg 831w, https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2019\/04\/19075802\/Original-Issue-Discount-03-300x34.jpg 300w, https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2019\/04\/19075802\/Original-Issue-Discount-03-768x86.jpg 768w\" sizes=\"(max-width: 831px) 100vw, 831px\" \/><\/center><\/p>\n<h2><span class=\"ez-toc-section\" id=\"More_Advanced_Walkthrough_Original_Issue_Discount_with_Debt_Principal_Repayments\"><\/span><strong>More Advanced Walkthrough: Original Issue Discount with Debt Principal Repayments<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><strong>\u00a0<\/strong>If there are Mandatory or Optional Repayments on the Debt, you must amortize the OID more rapidly, which is slightly more complicated to model.<\/p>\n<p>Companies call this \u201cExtra Amortization\u201d something like \u201cLoss on Unamortized OID on Repayment,\u201d and it\u2019s based on % Debt Principal repaid in the current year * OID balance after OID Amortization in the current year.<\/p>\n<p>So, for example, if we assume the following:<\/p>\n<p><strong>Beginning OID Balance:<\/strong> $10<\/p>\n<p><strong>OID Amortization:<\/strong> $2<\/p>\n<p><strong>Principal Repayment:<\/strong> $20<\/p>\n<p>Then the \u201cLoss on Unamortized OID on Repayment\u201d will be: ($20 \/ $100) * $8 = 20% * $8 = $1.6.<\/p>\n<p>Here\u2019s what it looks like in Excel if we assume the same OID Discount of $10, Annual Amortization of 20%, a 5-year maturity, and a Fixed Coupon Rate of 10%:<\/p>\n<p><center><img decoding=\"async\" class=\"aligncenter wp-image-20775 size-large\" title=\"Original Issue Discount with Debt Principal Repayments\" src=\"https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2019\/04\/19075802\/Original-Issue-Discount-04-1024x602.jpg\" alt=\"Original Issue Discount with Debt Principal Repayments\" width=\"1024\" height=\"602\" srcset=\"https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2019\/04\/19075802\/Original-Issue-Discount-04-1024x602.jpg 1024w, https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2019\/04\/19075802\/Original-Issue-Discount-04-300x176.jpg 300w, https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2019\/04\/19075802\/Original-Issue-Discount-04-768x451.jpg 768w, https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2019\/04\/19075802\/Original-Issue-Discount-04.jpg 1125w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/center>The Amortization of Original Issue Discount itself also changes in this scenario.<\/p>\n<p>To calculate it, you take the minimum between the OID Beginning Balance and OID Beginning Balance \/ Years Remaining in Amortization Period:<\/p>\n<p><center><img decoding=\"async\" class=\"aligncenter size-full wp-image-20776\" src=\"https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2019\/04\/19075801\/Original-Issue-Discount-05.jpg\" alt=\"OID Calculations with Debt Principal Repayments\" width=\"843\" height=\"407\" srcset=\"https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2019\/04\/19075801\/Original-Issue-Discount-05.jpg 843w, https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2019\/04\/19075801\/Original-Issue-Discount-05-300x145.jpg 300w, https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2019\/04\/19075801\/Original-Issue-Discount-05-768x371.jpg 768w\" sizes=\"(max-width: 843px) 100vw, 843px\" \/><\/center>So, with OID of $10 and a 5-year period, this will initially be $10 \/ 5 = $2. But it will fall to less than $2 by the end because the OID Balance and OID Amortization Period keep decreasing.<\/p>\n<p>As a result, the OID Balance itself decreases by a total of $3.6, then $2.8, then $2.0, then $1.2, and then $0.4 in the final year \u2013 not the constant changes we saw before.<\/p>\n<p>On the financial statements, the \u201cLoss on Unamortized OID on Repayment\u201d counts as another expense on the Income Statement.<\/p>\n<p>Cash Interest, OID Amortization, and the Loss on Unamortized OID on Repayment all reduce the company\u2019s Pre-Tax Income, Taxes, and Net Income:<\/p>\n<p><center><img decoding=\"async\" class=\"aligncenter wp-image-20777 size-large\" title=\"Original Issue Discount on the Income Statement with Debt Principal Repayments\" src=\"https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2019\/04\/19075800\/Original-Issue-Discount-06-1024x303.jpg\" alt=\"Original Issue Discount on the Income Statement with Debt Principal Repayments\" width=\"1024\" height=\"303\" srcset=\"https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2019\/04\/19075800\/Original-Issue-Discount-06-1024x303.jpg 1024w, https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2019\/04\/19075800\/Original-Issue-Discount-06-300x89.jpg 300w, https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2019\/04\/19075800\/Original-Issue-Discount-06-768x227.jpg 768w, https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2019\/04\/19075800\/Original-Issue-Discount-06.jpg 1116w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/center>On the Cash Flow Statement, Net Income is lower, and you add back the Amortization of OID and the Loss on Unamortized OID on Repayment since they\u2019re both non-cash expenses:<\/p>\n<p><center><img decoding=\"async\" class=\"aligncenter wp-image-20778 size-large\" title=\"OID on the Cash Flow Statement with Debt Principal Repayments\" src=\"https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2019\/04\/19075800\/Original-Issue-Discount-07-1024x232.jpg\" alt=\"OID on the Cash Flow Statement with Debt Principal Repayments\" width=\"1024\" height=\"232\" srcset=\"https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2019\/04\/19075800\/Original-Issue-Discount-07-1024x232.jpg 1024w, https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2019\/04\/19075800\/Original-Issue-Discount-07-300x68.jpg 300w, https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2019\/04\/19075800\/Original-Issue-Discount-07-768x174.jpg 768w, https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2019\/04\/19075800\/Original-Issue-Discount-07.jpg 1054w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/center>These items <strong>boost<\/strong> the company\u2019s <a href=\"https:\/\/breakingintowallstreet.com\/kb\/financial-statement-analysis\/free-cash-flow-example\/\" target=\"_blank\" rel=\"noopener noreferrer\">Free Cash Flow<\/a> because they\u2019re non-cash items that reduce the company\u2019s taxes, similar to Depreciation.<\/p>\n<p><strong>Advanced Note:<\/strong> In reality, these items may not <em>actually<\/em> boost FCF with everything factored in because they may not be deductible for cash-tax purposes.<\/p>\n<p>In that case, there will be a negative adjusting line item for Deferred Taxes that reduces the company\u2019s FCF and eliminates the tax savings from these items shown on the Income Statement.<\/p>\n<p>However, this is an advanced point that we don\u2019t recommend bringing up in an interview context unless you want to go down the \u201crabbit hole\u201d of tax-related questions.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Does_Original_Issue_Discount_OID_Truly_Matter\"><\/span>Does Original Issue Discount (OID) Truly Matter?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>In most cases, no, not really.<\/p>\n<p>Most Debt is <strong>not<\/strong> issued at a huge discount to par value; the 1-3% range is typical in normal markets.<\/p>\n<p>The company may save a <strong>tiny<\/strong> amount on taxes as a result, especially in countries with relatively low corporate tax rates (15% &#8211; 25%) \u2026and it takes <strong><em>a lot<\/em><\/strong> of extra work to set up these OID calculations, especially if there are many tranches of Debt.<\/p>\n<p>It does not factor into financial statement analysis or metrics such as <a href=\"https:\/\/breakingintowallstreet.com\/kb\/financial-statement-analysis\/roic-return-on-invested-capital\/\" target=\"_blank\" rel=\"noopener\">Return on Invested Capital<\/a>, and it does not contribute to items like the <a href=\"https:\/\/breakingintowallstreet.com\/kb\/financial-statement-analysis\/change-in-working-capital\/\" target=\"_blank\" rel=\"noopener noreferrer\">Change in Working Capital<\/a>.<\/p>\n<p>So, be familiar with OID, but don\u2019t obsess over it. You could easily simplify or ignore it in case studies and modeling tests and be fine.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Recap_and_Summary\"><\/span>Recap and Summary<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Here&#8217;s the TL;DR version of everything covered above:<\/p>\n<p><strong>Original Issue Discount (OID):<\/strong> This occurs when the Face Value of a bond is $100, but the company issues it for some amount less than $100, such as $90, because its Coupon Rate is lower than market rates on similar bonds, or because there are doubts about the company\u2019s credit quality.<\/p>\n<p><strong>No Principal Repayments:<\/strong> Amortize the OID \/ # Years to Maturity each year. Show this expense on the Income Statement under Interest Expense, and add it back on the Cash Flow Statement as a non-cash expense. The Book Value of Debt on the Balance Sheet will increase by this amount each year, but the company still pays Cash Interest each year based on the $100 Face Value of the bond.<\/p>\n<p><strong>Principal Repayments:<\/strong> Accelerate the OID Amortization based on (OID <em>after<\/em> Normal Annual Amortization) * % Principal Repayment in the Year, and record this item as a \u201cLoss on Unamortized OID on Repayment.\u201d The normal OID Amortization starts higher and declines each year, so the OID Balance declines by less and less each year until it reaches 0. You add back both the OID Amortization and the Loss on Unamortized OID on Repayment as non-cash adjustments on the CFS. The Face Value changes based only on the Principal Repayments each year.<\/p>\n<p><strong>Impact:<\/strong> OID at modest levels barely makes an impact on models and valuations. It\u2019s good to know, but it won\u2019t make a \u201cno\u201d investment recommendation turn into a \u201cyes\u201d in most cases. Exceptions apply for distressed companies and others that issue Debt at very high discounts.<\/p>\n<p>Finally, if you can&#8217;t fall asleep and you need the equivalent of a sleeping pill, check out the <a href=\"https:\/\/www.irs.gov\/publications\/p1212\" target=\"_blank\" rel=\"noopener noreferrer\">IRS guide to OID instruments for more details<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Original Issue Discount refers to when a company issues Debt at a discount to par value. For example, a bond is worth $100 (the \u201cface value\u201d that the company pays interest on), but the company issues it for $90, which lets investors buy the bonds at a 10% discount and still earn interest based on the $100.<\/p>\n","protected":false},"featured_media":21900,"template":"","class_list":["post-20287","biws_kb","type-biws_kb","status-publish","has-post-thumbnail","hentry","kb_category-debt-equity"],"acf":[],"_links":{"self":[{"href":"https:\/\/breakingintowallstreet.com\/wp-json\/wp\/v2\/biws_kb\/20287","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/breakingintowallstreet.com\/wp-json\/wp\/v2\/biws_kb"}],"about":[{"href":"https:\/\/breakingintowallstreet.com\/wp-json\/wp\/v2\/types\/biws_kb"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/breakingintowallstreet.com\/wp-json\/wp\/v2\/media\/21900"}],"wp:attachment":[{"href":"https:\/\/breakingintowallstreet.com\/wp-json\/wp\/v2\/media?parent=20287"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}