A Seariver Runs Dry

I cannot believe I failed to mention thiis, especially since I once made a market in this bond and my best friend and former bond partner reminded me last week. The much misunderstood Seariver Maritume 0.00% due 09/1/12 has matured. What makes this passing special was that it was one of three tax-deferred corporate "zero" in the markets. The beneficiary of an IRS loophole in the 1980s and grandfathered by the courts the former Exxon Shipping bond was misunderstood by many market participants and investors. As a tax-deferred bond, investors did not pay tax on accretion (phantom income) annually, as with traditiional corporate zeros. Instead, tax was paid on the entire accretion at maturity. This made it an oustanding bond for minors and retirement accounts. The only other tax-deferred zeros are the Ally (GMAC) Units (of $10,000) 0.00% due 12/1/12 and the Ally 0.00% due 6/15/15. Thanks to tax law changes, no such tax-deferred corproate bonds will be issued again. The Ally 0.00% of 6/15/15 are offered at a yield-to-worst in the neigborhood of 4.87%. Both Ally bonds are currently callable at their accreted value, but since the accreted value of the 15s is about 93.961, a call isn't likely. The main problem with these (besides being obligations of Ally) is that they trade rather infrequently.