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Dear Sir, I still confused how an attractive bond, is it should be issued @ coupon rate > market interest rate and a premium on repayment?
There are lots of ways of trying to make an issue of bonds attractive to investors.
The most obvious way is to offer a high coupon rate. Alternatively issue at a discount (so they get more back on redemption than they paid, as well as still receiving interest). Alternatively promise to redeem at a premium (so that again they get more back on redemption than they originally paid, as well as receiving interest).
A high coupon rate means it should be higher than market interest rate at the issuing time, is it right?
Not necessarily higher. Remember that the coupon rate will stay fixed, and so if investors think that market rates are going to fall in the future then they might find the bonds attractive even if currently the coupon rate it not higher.
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