Hi all
I recently bought few quantities of a ncd bond from bse through zerodha platform. I thought the accrued interest from the last payment date will be deducted over and above the bond purchase price . But no extra amount was deducted other than the purchase price.
Kindly clarify how accrued interest is paid to the bond seller or is it not paid to the seller?
@Bhuvan sir
If you bought on kite, the price is already discounted means it will include accrued interest, so in the next coupon payment date full interest will be paid to buyer only, I mean who ever is holding the bond as on record date.
Thanks for reply. Let me ask from seller perspective for better clarity
Let us say I have 1 ncd face value Rs 1000 annual interest payment.
Accrued interest is Rs 150 as on selling date.
I place sell order in kite at Rs 1005. Now will you automatically add this accrued interest Rs 150 and place my sell order at Rs 1155?
Can you take seller example and explain how he gets the accrued interest?
Selling/buying bonds on secondary markets like BSE/NSE does not involve separate payment of any accrued interest on the bonds. One receives/pays the price that is traded on the market (minus the various charges like brokerage, taxes, fees, …).
@ksksat What folks mean when they say this is
the folks placing asks/bids on bonds on BSE/NSE
have already accounted for interest amounts in their asks/bids.
(i.e. there being no separate partial accrued interest payments)
It will be placed at 1005 only, as a seller you need to add accrued interest and place order.