Bond Put Dates, Coupon Entitlement, and Business-Day Conventions
Summary
The document discusses whether put dates on bonds coincide with coupon dates, whether exercising a put preserves the coupon, and how scheduled coupon payments are adjusted when dates fall on weekends or holidays. The responses report that put dates commonly align with coupon dates, but the treatment of the coupon upon exercise can vary: some terms forfeit it, while other bonds may entitle the holder to it. The governing prospectus is the decisive source for an individual bond.
Coupon schedules and payment adjustments depend on contractual conventions that often vary by market or country. A next-business-day adjustment is described as common when a payment date falls on a non-business day. These are market observations rather than universal rules; bond terms may specify different conventions, so the document does not establish a single schedule calculation applicable to every issue.
Key ideas
- Put dates are commonly scheduled on coupon dates, but this is not presented as an absolute rule.
- Coupon entitlement when exercising a put depends on the bond's contractual terms.
- A next-business-day adjustment is commonly used for payments falling on non-business days.
- Consult the prospectus or issue-specific convention because practices vary across bonds and markets.
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Full text
# Do Bond Put Dates always fall on Coupon Dates (for non-zero coupon bonds). Calculation rules for Coupon Dates # Do Bond Put Dates always fall on Coupon Dates (for non-zero coupon bonds). Calculation rules for Coupon Dates This may not be the most appropriate SE site to ask this question, but I can't seem to find a better place to ask, so here goes: - Do Puttable Bonds' put dates always fall on Coupon Dates? When they do, are the bonds puttable before or after the coupon? - Coupon Schedule. How are coupon payment dates usually calculated? Say if a semi-annual bond is issued on Jan 5, 2010, then are payment dates always on Jul 5 and Jan 5. What happens when they fall on weekend? ## Answer by Brian B (score 3) https://quant.stackexchange.com/a/3786 Not all bonds have coupons, of course, especially in the world of convertible bonds (where puts are more common). I have yet to see a bond with a put date other than a coupon date. It is typical to forfeit a coupon in case of a put, but that's not universal. As to coupon dates, there's usually a "next business day" clause. Generally speaking, the world of interest rates contains a whole slew of conventions for interest payments and business days. In principle, any contract might follow any of the available conventions, though in practice they group by country. Bloomberg and other data services will tell you which convention any given bond is following, or you can read the prospectus yourself. ## Answer by dm63 (score 0) https://quant.stackexchange.com/a/22340 In my experience, put dates always fall on coupon dates. However, exercising the put should still entitle you to the coupon, since you have held the bond for the whole coupon period (or somebody has). Check the prospectus carefully on that point. If the payment day falls on a non business day, the payment is usually made on the next good business day.
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