Interest is paid out every 6 months relative to the date of issue/maturity.
To minimize the noise due to slippage/liquidity-cost,
let us consider a liquid GSEC trading in significant volumes on the secondary market.
- IN0020220060
- Issued on 22-Aug-2022
- Matures on 22-Aug-2032
- Interest paid-out (half teh coupon-rate) twice a year - February and August.
Looking at the historical price chart of 726GS2032 on NSE,
It forms a ramp/saw-tooth pattern aligned to the period of regular interest payouts.
The peak being just before the record-date each period.
This is because the “fair-price” of a GSEC is based on the effective yield.
Note that the price of a GSEC on the secondary markets is NOT purely based on this factor alone. The impact of other factors including the outlook of sovereign debt, demand for sovereign debt due to market conditions, can be seen as deviations of the price from a perfect saw-tooth pattern.
The interest for the entire period of 6-months is paid out to the holder of the bond on the record-date (at the end of the period). For example, someone purchasing the bond on NSE in July will receive 3.63% interest (half of the coupon-rate 7.26%) for the period Mar-Aug just within a month, in August.
In case of 676GS2061, the more significant factor driving the price appears to be the long-term outlook of Indian sovereign debt, i.e. yields of 30+year bonds, and not the semi-annual interest payments.