Coupon Date

A coupon date is a scheduled date on which a bond issuer pays interest to bondholders. Coupon dates are set by the bond terms and are central to cash-flow timing, accrued interest, settlement, and yield calculations.

Key Takeaways

• Coupon date means the payment date for bond interest, not the bond’s maturity date.
• Coupon dates are usually fixed for plain fixed-rate bonds, but coupon amounts can vary for floating-rate or inflation-linked securities.
• If a bond trades between coupon dates, accrued interest normally affects the settlement amount.
• Final coupon timing should be checked against the maturity date, call terms, and payment calendar.

How Coupon Dates Work

Bond documents specify the coupon schedule. A semiannual bond might pay interest on January 1 and July 1 each year. A quarterly note might pay on four scheduled dates. A zero-coupon bond has no coupon dates because it does not make periodic interest payments.

Practical Example

A $1,000 bond has a 5% coupon paid semiannually on January 1 and July 1. Each coupon date, the scheduled interest payment is $25. If the bond is sold on April 1, the buyer normally pays the seller accrued interest for the portion of the coupon period the seller held the bond.

Why Coupon Dates Matter

Coupon dates help investors plan cash flows and help analysts model the timing of returns. They also matter for bond valuation because each coupon date is a cash-flow date in the present-value schedule.

Coupon dates can also matter for callable bonds. Some bonds can be redeemed on specified call dates, often around scheduled interest-payment dates. The exact rules come from the bond indenture, prospectus, or official statement.

Coupon Date vs. Nearby Terms

Common Mistakes

• Assuming the coupon date is the same as the ex-dividend date for a stock.
• Ignoring accrued interest when a bond is bought or sold between coupon dates.
• Assuming the final coupon continues after a bond is called or matures.
• Modeling floating-rate bonds as if the coupon amount is fixed for every coupon date.
• Relying on a summary quote instead of the official bond documents.

Public Source Checks

• TreasuryDirect Treasury notes states that Treasury notes pay interest every six months until maturity.
• TreasuryDirect Treasury bonds states that Treasury bonds pay fixed interest every six months until maturity.
• SEC EDGAR search can help locate public-company prospectuses and supplements for bond terms.

Related Terms

• Coupon Payment: The cash amount paid on the coupon date.
• Coupon Period: The interval between coupon dates.
• Accrued Interest: Interest earned since the last payment date but not yet paid.
• Bond Indenture: A legal document that may define payment and redemption terms.
• Zero-Coupon Bond: A bond without periodic coupon dates.

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