What Is a Bond Coupon? A Simple Guide to Interest Payments
A bond coupon is the interest rate an issuer pays to a bondholder. With fixed-rate bonds, this rate stays the same for the entire life of the bond. For floating-rate notes, the coupon changes with a money-market benchmark. Older instruments often used LIBOR, while newer ones commonly use SOFR. Coupons were once paper slips attached to bond certificates and exchanged for interest payments. Today, payments are usually made electronically, often every six months or once a year.
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