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Category — Issue Parameters
A coupon is a periodic payment received by the holder of a coupon bond.

The coupon represents a certain percentage of the par value and expresses a fee for the use of funds payable by the issuer of the bond in favor of its holder. Coupon payments are made annually, semi-annually, quarterly or monthly.

It has the following characteristics:
• Coupon rate;
• Type of coupon rate;
• Basis for calculating the accrued coupon yield (NKD) and coupons;
• Coupon payment frequency;
• Coupon period.
As a rule, these parameters are specified in the issue document – the issue prospectus.

Types of coupon bonds:
• A discount bond or zero-coupon bond is a bond whose holder receives income from the difference between the par value paid when the security is redeemed and the purchase price below the par value. For example, Abu Dhabi Commercial Bank, 0% 11aug2046, USD (10971D).
• A Coupon bond is a bond whose holder receives periodic coupon payments. For example, Aggregated Micro Power Holdings, 8% 17oct2036, GBP. Coupon bonds are divided into bonds with permanent coupon rate and variable coupon rate.
•Bond interest which is paid to the holder upon redemption of the security. For example, Securitizadora Security, 3.75% 1jan2043, CLF (C3, ABS).
• A non-income-producing bond is a bond whose holder has a priority right to purchase a particular product or service. For example, Borisov combine of bakery products, FRN 28dec2029, BYN (01).

The following types of rates are available for variable coupon bonds: • A floating rate is a variable coupon rate linked to a specific financial indicator, such as the yield on government securities or the average interbank interest rate. The coupon rate is usually calculated as the sum of the base rate and margin. A kind of a floating coupon rate is a rate with a preset upper and lower limits of fluctuations in its values.
• Step-up/Step-down is a variable coupon rate set at a sufficiently low/high level when issuing a bond and assuming a further increase/decrease.
• A revised interest rate is a variable coupon rate that can be periodically revised to make the price of a bond match a certain value, as a rule, close to par value.
• Fix to Float is a variable coupon rate that is fixed for a certain period of time and then changes in accordance with the conditions determined by the issuer. One type of variable-income bonds are indexed bonds.

Depending on the type of indexation (indexation of coupon or par value), when calculating coupon payments, the value of the coupon rate or the par value is recalculated taking into account the growth of any index. Most often, the consumer price index is used.
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