Coupon frequency
The coupon frequency refers to how often interest payments, known as coupon payments, are made to bondholders over the life of a bond.
The frequency of coupon payments on a bond is determined by a combination of issuer preferences, market standards, investor demand, bond structure, maturity, interest rate environment, and regulatory considerations.
Possible values:
- Quarterly
- Annual
- Monthly
- On aperiodic schedule
- Semi-annual
- Pays at maturity
- On effective payment date
- Every 2 years
- Every 4 months
- Daily
- Every 28 days
- Weekly
Annual
Bonds with an annual coupon frequency make interest payments once a year. Bondholders receive coupon payments on an annual basis, typically on the same date each year.
On aperiodic schedule
A bond with an aperiodic schedule for coupon payments does not follow a regular or predetermined payment frequency. The interest payments may occur at irregular intervals based on specific terms outlined in the bond agreement.
Pays at Maturity
Bonds that pay interest "at maturity" do not make regular coupon payments during the bond's term. Instead, the bondholder receives the full principal amount plus any accrued interest at the bond's maturity date. This type of bond is also known as a zero-coupon bond.
On effective payment date
Bonds with coupon payments "on effective payment date" make interest payments on specific dates throughout the year. The payment dates are predetermined and outlined in the bond agreement, and bondholders receive interest payments on these specified dates.
Daily
Bonds with a daily coupon frequency make interest payments every day. This type of coupon frequency is less common and is usually associated with specialized or unique bond structures.