How is the interest compensated in the case of zero coupon rate debentures?

By issuing them at a substantial discount

In the case of zero coupon rate debentures, the interest is compensated by issuing them at a substantial discount to their nominal or face value. Zero coupon rate debentures are initially sold to investors at a price significantly lower than their face value. This discounted purchase price is typically much lower than what the investor will receive when the debenture matures. The difference between the nominal (face) value of the debenture and the discounted purchase price is considered the amount of interest related to the duration of the debentures. This difference represents the interest earnings for the investor over the life of the debenture. Unlike specific coupon rate debentures, zero coupon rate debentures do not make regular interest payments (coupon payments) to investors during their term. Instead, the investors receive the full face value of the debenture when it matures, which compensates them for the discount at which it was originally issued.