Bonds Issued between Interest Dates

Bonds Issue date can be different from the bond date, but issuer must pay interest for the time frame. Bonds holders will receive full interest income even they purchase bonds for a partial interest period.

Bonds Date is the date state on the physical bond. Bond must have a par value, interest rate (coupon rate), and bond term. Bond term count from the bond date to its expired date. The bond date is the start of bond effective even they are not yet issued to the market.

Bonds issued is the date which investors purchase the bonds from the market. It usually later than the date of the bonds. The issuer need to accrued interest expense since the bond date even they are not yet sold to the public.

Bonds holders will entitle to receive full interest payment for the first period even they purchase them after the issue date.

Example

Company ABC decides to issue with the following term:

• Par Value = 10,000
• Interest rate = 7%
• Interest Paid annually
• Term 5 years
• Bonds Date: 01 Jan 202X
• Expired date: 31 Dec 202X+5

The bond date is 01 Jan 202X, but the company needs to go through a long process regulation. The bonds are sold to the investors on 01 March 202X. The first interest will be paid to the bondholder on 31 Dec 202X. However, investors only invest on 01 March 202X which is only 10 months.

The bondholder on 31 Dec 202X will receive interest for 12 months even they just invest for 10 months.