What is a short or long first coupon?

A bond can pay a short (or long) coupon when the scheduled payment is for a period different than its standard intervals. This tends to be more common for the first coupon after issuance but can also apply to the final coupon before maturity.

For example, if a bond is issued on April 1st with semi-annual coupons payable on the 1st of June and December, then its first coupon payment in June will be for less than the stated semi-annual amount given that there were only two months in the coupon period instead of six. The subsequent coupon payments are then credited at their regularly scheduled amounts and intervals.

Investors should review the bond’s prospectus to confirm its specific coupon methodology.

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